There is a common - but dangerous - myth that is often repeated by financial analysts and reporters: That bankruptcy should be your last resort.
While Los Angeles Chapter 7 Bankruptcy Attorney Vincent Howard understands the principle behind it, which is that it shouldn't be entered into without careful thought, the truth is that waiting too long to file can make your financial situation worse.
What ends up happening is that you throw good money after bad. Without the guidance of a skilled bankruptcy lawyer, you end up taking poor advice and digging yourself deeper into debt, sometimes cashing in money or assets that you may have otherwise been able to hold onto.
In the first place, your health is likely to suffer the longer you wait. There is a great deal of research conducted on the health effects of stress. Anecdotally, it can't be overstated how much the burden of debt affects your stress levels. A lot of people have trouble sleeping. Some suffer from depression. Others attempt to self-medicate with food or alcohol or tobacco. What's worse, people may feel they can't seek out medical treatment for these problems if they're so far in debt they can barely afford the basics. It feels like a vicious cycle.
But it doesn't have to be. While the bankruptcy process is not entirely stress-free, it will put you on the road to relief.
Another problem that we frequently see with individuals who have waited too long to file is that they often make more financial mistakes that cost them dearly in the long-term. A prime example is someone who is overwhelmed by credit debt or medical bills, and cashes out their retirement account in a futile attempt to pay it off. A few months or years down the road, they may still have to file for bankruptcy, and their retirement money is gone. These are the kinds of mistakes we can help you avoid. The reality is, you may be able to save your home in a bankruptcy as well as keep most major assets - and your retirement fund is untouchable. It's better to seek help sooner than leave yourself in an even more precarious financial situation.
And lastly, the longer you wait to file, the longer you remain stuck. What makes many people hesitate to file is that they are treading water. That is, they are able to pay their bills - but barely. They make the minimum payments on everything, which means the debt won't actually be paid off until years - sometimes decades - later, if at all. These leaves you a slave to these debts, unable to save or do much else except work to pay. Everyone has a bad month every now and then - or even a bad couple of months. But if you're finding yourself simply making the minimum payments on your debts for several months, it's time to have a serious evaluation of your options.
But how do you know if you're there yet? Here are a few signs that you have probably waited to long to consult with a Chapter 7 bankruptcy lawyer:
1. Your car has been repossessed.
2. The Internal Revenue Service has filed a tax lien against your property.
3. Your paycheck is swallowed up immediately by lenders.
4. You are dipping into your retirement account to pay off your credit card or medical debts.
Los Angeles Bankruptcy Attorney Vincent Howard at Howard Law can help. You can reach us toll-free at 1-800-872-5925 or send us a message online.
6 Signs You Waited Too Long to File Bankruptcy, By Jill Michaux, Money Health Central