Anyone who is struggling with money has likely considered bankruptcy to some degree, but most people consider it the absolute last resort. They exhaust all of their other options and when there’s nothing left to do except give up they file for bankruptcy.
Unfortunately, this approach can cause more harm than good. There are instances in which you should delay bankruptcy until you have attempted other means to resolve your financial crisis. And there are also times when you should skip the desperate attempts to avoid bankruptcy and move forward with filing.
How Do you Know which of these Two Scenarios is Right for You?
First, it’s important to understand a few things about bankruptcy. Many people don’t realize this, but under the US Constitution, your right to file for bankruptcy is protected. Bankruptcy laws were created to protect debtors and creditors. And just as you would exercise any other right, it’s reasonable to exercise your right to file for bankruptcy. There’s also no shame in doing so.
Bankruptcy and Your Credit
Another reason people in financial trouble postpone filing for bankruptcy is because of the damage they believe it will cause their credit. In reality, bankruptcy can actually help your credit.
If you are considering bankruptcy, chances are good your credit is in disrepair. Postponing bankruptcy isn’t going to help it any either.
Here’s what you need to understand about bankruptcy and your credit: the fact that you file for bankruptcy remains on your credit report for up to 10 years. This means any time someone pulls your credit report for a decade after you file, he or she will see that you filed for bankruptcy. Obviously, this isn’t the best statement you can make about your financial prowess, but it is better than years and years of ignoring your financial problems.
Lenders would rather see that you took a definitive action to fix your credit problems than see you avoided the problem for as long as possible. Once you file for bankruptcy, you begin to move forward and the further and further away you get from having file the better your credit opportunities will be. Essentially, filing sooner rather than later is the better option for many people.
Bankruptcy and Your Assets
Sometimes people postpone filing for bankruptcy because they are worried they’ll lose their home or other assets. Bankruptcy, in fact, can protect you from this occurrence. Many people postpone bankruptcy so long out of this fear, they end up having to rush through bankruptcy just to avoid foreclosure and protect their most valuable assets. For many, the only way they are going to be able to retain ownership of their home is to file for bankruptcy.
Filing for bankruptcy is obviously not something you want to invite into your life or strive to achieve. However, it also isn’t something for which you should feel ashamed or you should view as only a last resort. It’s a tool that is legally available to you and in some cases, it is going to be the best tool available.
Forbes.com offers this article about protecting your assets during bankruptcy. For how asset protection works in your case, speak to an experienced bankruptcy attorney.
If you would like to know more about bankruptcy or you want to discuss whether it’s the right time for you to file, we can help. Contact the Law Offices of Robert M. Geller at 813.254.5696.