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Financial and Personal Recovery Possible After Filing for Bankruptcy, Experts Say

January 11, 2011

One of the frustrating parts of our job as Fontana personal bankruptcy lawyers is the misinformation surrounding bankruptcy. Bankruptcy is a legal issue that can be complicated, and because it's an upsetting decision, many people just don't have the heart to become better informed. That stigma and bad information can cause unnecessary heartache and other problems for people headed toward bankruptcy, as a Chicago Tribune columnist wrote Dec. 26. Life after bankruptcy isn't the financial desert many people fear, the article said, so fear of a future in poverty shouldn't hold back potential filers. In fact, waiting too long to file can drain savings that could have been protected from bankruptcy, or at least prolong aggravation from aggressive creditors.

The bankruptcy experts in the article emphasize that bankruptcy is not free of consequences. There are a social stigma and personal feelings to consider, and a bankruptcy will stay on your credit record for up to 10 years. However, that doesn't mean it will be impossible to get credit during the entire decade. Studies have shown that some formerly bankrupt people are able to get home loans within two years after the bankruptcy is discharged, assuming other parts of their financial lives are in order. Former filers are often offered credit cards within a few years of discharging their debts, though these can have unattractive interest rates.

Meanwhile, the consequences of waiting too long can be ugly, the article says. When you put off filing for bankruptcy past the time when you know you need to, you can run through assets that might be protected, such as retirement savings. Delaying bankruptcy also denies you the protections it offers against foreclosure, eviction, wage garnishment, lawsuits and car repossession. Filing for bankruptcy stops these and other legal actions, allowing you a chance to keep a home or car that might otherwise be taken. Once a creditor has sued you and gotten a legal judgment, you can't discharge it in bankruptcy -- so waiting can take away that opportunity.

As Dana Point individual bankruptcy attorneys, we encourage everyone considering bankruptcy to consider it from this practical, unemotional standpoint. It's tempting to ignore stressful problems that don't directly affect your life, but that can lead to more problems down the road. With new clients and potential clients, we generally review all of their finances to decide whether they can realistically pay off their debts within three years (not counting mortgage debt). If they cannot, it's best to consider bankruptcy. As the article notes, some people are better candidates for alternatives to bankruptcy, like making new payment plans, but that's not always possible when your finances are limited or the creditor isn't flexible. In our opinion and experience, there's nothing wrong or irresponsible about making a rational decision to file for bankruptcy -- in fact, taking charge of your debt is often more responsible than continuing to let it pile up.

If you're considering a bankruptcy, contact Howard Law PC for a free, confidential evaluation of your finances and case. We start every case by considering whether the client truly needs bankruptcy, and sometimes suggesting alternatives like loan modification or a predatory lending lawsuit. When bankruptcy is the best choice, our Murrieta consumer bankruptcy lawyers can guide clients through all of the complicated decisions and legal issues that lie ahead. Most individuals and married couples can choose between Chapter 7 bankruptcy, which sells off most assets to pay debts and forgives any remaining debt, and Chapter 13, which allows clients to make a payment plan to pay off most debt. We help clients make the choice that's best for them, taking into account California bankruptcy exemptions and their own needs.

Howard Law offers free, confidential consultations, so you can tell us about your case at no further obligation. To learn more or set up a meeting, call us today at 1-800-872-5925 or send us a message through the Internet.