In our experience, when someone decides to file bankruptcy they are taking the first step in a final solution to their debt problems. There are other alternatives to bankruptcy, but they act more like a Band-Aid than a solution. Choosing bankruptcy is an important personal decision, but too often people allow other’s misconceptions about bankruptcy prevent them from resolving their debt through bankruptcy.
Below you will find two journeys people have followed as they struggle with choosing the right consumer debt solution.
Chapter 13 Bankruptcy Saved Their Home
Ted and Jane had lived in the same home for 10 years. Jane is a homemaker and Ted worked for a local construction company. Unfortunately, Ted was laid off from his job two years ago. Unemployment compensation was not enough to pay all of their bills and living expenses so they had to prioritize. So, they chose to keep their house payments current and let their credit card bills go. Even though they had debt collectors harassing them daily, they were able to keep the mortgage current which provided them piece of mind knowing that their home was safe. Jane also found a part-time job that helped provide for some of their necessities.
Eventually Ted’s unemployment compensation ran out. Even though he put all his efforts into finding a good job, he was forced to take a job making far less than he had before the layoff. They still were not earning enough to pay all of their bills and, even worse, they began missing mortgage payments. They researched several consumer debt solutions, including debt consolidation and refinancing their mortgage; however, they knew none of these solutions would resolve all of their debt problems. Family and friends had also recommended using the funds in their retirement account, but Jane was against this. Eventually, they decided to consult with a bankruptcy attorney simply to have their questions answered.
After meeting with their bankruptcy attorney, they realized they could file Chapter 13 to stop the foreclosure on their home, reorganize their debts into a manageable plan and protect their retirement funds. Both Ted and Jane felt as if filing bankruptcy would be a Band-Aid for their problem; however, they realized that through bankruptcy they could save their home, stop creditor harassment and prepare for their family’s future.
Filing a Chapter 7 Bankruptcy Provided a Fresh Start
One day, Jack found himself with credit card debt that he could not afford to pay. By the time he came into the office for a free bankruptcy consultation, he was at the point of borrowing from one card to pay other cards, and he was facing several lawsuits by the credit card companies. Debt collectors were calling every few hours and Jack did not know how he was going to turn things around. Jack had always been told by his parents that filing a bankruptcy was something to be ashamed of because it was cheating creditors out of the money that you promised to pay back. Jack was afraid that everyone would find out he filed bankruptcy and would look at him like he was a failure. That is how he felt, anyway.
The truth is that Jack got into debt without giving it much thought and he was in over his head before he realized it. If Jack were able to make the minimum monthly payments on all of his credit cards, it would have taken him 17 years to pay the debt in full. This is not a very realistic plan even if Jack was not already behind on all of his debt payments. Jack decided to meet with a bankruptcy attorney, and he was advised to file a Chapter 7 bankruptcy case. At first, Jack resisted because he feared what others would think and he viewed filing bankruptcy as some type of failure on his part.
His attorney explained that our lawmakers and our Courts viewed bankruptcy in a different light. The Supreme Court said that bankruptcy gives “the honest but unfortunate debtor…a new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of preexisting debt.” Furthermore, the mandatory credit counseling and debtor education courses that Jack would take as part of the bankruptcy process would help give him the skills, tools and knowledge he needs to start fresh.
The attorney advised Jack that filing a bankruptcy was the best consumer debt solution available to him. And, as a bonus, no one, including his parents if he wished, would ever need to know about his bankruptcy filing. So, Jack filed a Chapter 7, discharged his credit card debt and started fresh. He even opened a savings account to build an emergency fund for unexpected expenses so that he would not need to rely on credit cards for these in the future.
A Viable Consumer Debt Solution
As you can see, people can fall into overwhelming debt for a number of reasons. Don’t let other’s misled beliefs keep you from considering bankruptcy as a solution. It will provide you with a fresh start where you are no longer harassed or overwhelmed day-in and day-out.
If you are in a situation of overwhelming debt, bankruptcy may be an option for you. The best way to find out is to talk to an experienced bankruptcy attorney. If it isn’t your best option, they will tell you and direct you toward a solution that fits your needs.