Bankruptcy is a big decision, and it’s not one I encourage people to enter lightly. If you have other obvious options to pay off your debt, those may very well be the best choice for you and your family.
But there are some situations in which you might need to file immediately. I see these in my office all the time.
Here are some key moments I’ve seen people choose not to file bankruptcy that have had terrible results:
- When you’re dipping into your retirement accounts
- When your credit is already devastated, but you’re worried bankruptcy will hurt it more
- When your job loss or medical emergency puts you in serious debt but you want to believe it’s temporary
It can be tempting to hold on to things as they are. But it can also ruin your financial future. As a bankruptcy attorney in Memphis, I’d like to offer my answer to all three of the above situations:
- Dipping into your retirement accounts:
One of the most common issues I see from older clients is the decision to dig into a 401K or IRA retirement account. Taking from your future savings to keep your house or your car simply isn’t necessary, and it will leave you in terrible shape down the road.
It’s never a good investment to impoverish your future self just to keep your present self treading water. Bankruptcy can save your retirement account and usually help you keep your property, too.
- Saving your credit score:
There’s a common myth that bankruptcy is the worst thing you can do for your credit score. It simply isn’t true. The worst thing you can do for your credit is wait and wait until it’s already ruined anyway.
Which is worse: having terrible credit for years and doing nothing about it, or having terrible credit for a short while and then rebuilding without the debt? I offer a program that helps you improve your credit score to an A rating in one year, even after a bankruptcy. I’ve seen my clients do it, and I know you can do it, too.
- “Temporary” job loss or medical emergency:
If there’s anything the last few years have taught us, it’s that nothing is certain in this economy. Never just assume things will get better when your savings, credit, and assets are on the line. I met with a couple recently who had been pretty successful in their careers, but had each been downsized or let go in the last 6 months.
They just knew their jobs would come back and everything would be OK, but the jobs didn’t come back. Eventually their 6-figure retirement was gone, and they still had a pile of debt, and still couldn’t make house payments. They lost their home and retirement, and had to start over anyway.
That same couple has written me many times to tell me bankruptcy was the best thing that could have happened. Do they wish they’d filed sooner? Of course. But their lives are much better now, and it only took a year or so to get there.
If you’re considering bankruptcy, there’s no way it’s an easy decision. I understand. But at least you can recognize the warning signs early and make a change before it hurts you any further.
We’re happy to answer your questions, free of charge. Give me a call to discuss your situation: 901-327-1212, or reach me online.