Nancy*, one of my previous clients, went into her bankruptcy kicking and screaming. Here is how she tells her story today: Filing a bankruptcy case was the last thing I wanted to do, but I had lost my job and the bills began to pile up. There was no end in sight. I hated imagining what my parents, neighbors, co-workers and friends would think when they found out that I filed bankruptcy. I tried to find another way out of debt; however, nothing I tried helped and some solutions even made the situation worse.
Now that I am on the other side of the fence (my petition was accepted and I just made my final payment toward my Chapter 13 repayment plan last year), I have a completely different opinion about the bankruptcy process. Here are the pros and cons of bankruptcy, from my perspective.
Pros Of Filing Bankruptcy
Nobody has to know that I filed bankruptcy. I was able to retain my privacy so that none of my close acquaintances knew I filed bankruptcy. It was up to me to decide who I wanted to confide in.
Passionate and educated help is available. One of my ideas was to work with a debt consolidation program; however, there was no personal interaction or compassion for my financial situation. The only thing the debt consolidation company seemed to care about was my monthly payment. When I first met with William Kain, the first 10 minutes consisted of questions about my emotional state and what stresses were contributing to my situation (it turns out they all stemmed from my financial struggle). I felt as if I finally found someone who would help me with my financial struggle. William explained how bankruptcy was going to help relieve my anxiety and discomfort by creating an affordable solution to my debt problems. I could finally begin to see a light at the end of a long, dark tunnel.
Bankruptcy allowed me to do what I could for my debts. I filed a Chapter 13 bankruptcy case, which eased my mind because I felt bad not being able to pay off my debts. Through my Chapter 13 plan, I was able to make payments toward my debt without falling deeper into debt each month.
Bankruptcy allowed me to pay back what I could afford. When I finished my chapter 13, I had paid $7,820 toward my credit card debt and the remaining balance, $31,325, was wiped out, tax free. William set me up with a payment I could afford to pay, and at the same time, allowed me the ability to pay my monthly bills, comfortably.
Education component built into the process. As part of my bankruptcy, I was required to complete a financial management course. I thought it would be difficult and time-consuming; however, I completed it online in only two hours. It was inexpensive and it taught me valuable skills that have helped me manage my money throughout my repayment plan and will help me budget and make responsible financial decisions in the future.
(Perceived) Cons Of Filing Bankruptcy
Here are some of the perceived disadvantages to bankruptcy many people have; I’ll be the first to admit these were the reasons I resisted this debt solution for so long. However, I now believe they are serious misconceptions about the bankruptcy process, a process designed to help and offer fresh starts to those in need.
Stigma/Bad Reputation. Going through this process, I now understand what overwhelming debt feels like and the embarrassment of admitting I lost control (even though it was not my fault). Now I know that bankruptcy should not be considered a negative action - it is the debtor's attempt to get his or her life back under control with a fresh start. This is a courageous decision, a positive action!
Last Resort. I wish I had not considered bankruptcy a last resort to solve my debt problems. If I had turned to bankruptcy initially, before wasting time falling deeper into debt and failing during debt consolidation, I would have had my fresh start much sooner. Filing bankruptcy was a positive step toward resolving my debt so that I could begin to rebuild my finances.
Negative Impact On Credit. Many people believe that filing a bankruptcy will prevent them from ever obtaining credit again or owning property in the future. However, my credit rating was already suffering due to late payments and charge-offs, even before I began talking with my attorney. Filing a bankruptcy actually helped me improve my credit rating faster because when my debts were discharged I was able to begin rebuilding my credit, rather than waiting years for the negative accounts to drop off my credit report.
I Am a Bankruptcy Success Story
I am thankful that William Kain helped me weigh the pros and cons of bankruptcy when I went in for my free consultation. He also answered each of my bankruptcy questions and explained the bankruptcy process so that I did not feel nervous or anxious when it was time to file my bankruptcy petition. Through each step of my bankruptcy, I had the support of the entire staff at Kain & Scott. If I can do it – and I was admittedly one of the biggest unbelievers of the bankruptcy process – so can you.
*Name has been changed for privacy purposes.
