Are Bankruptcy Warnings for Real?
Simply Google the term “bankruptcy” and you’ll get a slew of information, much of it from credible sources, admonishing the risks of filing and warning debtors not to take such a drastic option. These warnings might be well-intentioned and might help some people avoid making a mistake, but in many cases, the risks listed are misleading.
The key to making the right choice for you when it comes to bankruptcy is determining how valid a warning is and how it applies to your specific situation.
Many warnings against bankruptcy paint it as an easy way out when it’s anything but. They make it seem as though people rush into bankruptcy and use it to excuse them from their responsibilities when in reality, this is rarely the case.
The truth is most people agonize over their decision to file for bankruptcy and avoid it for as long as possible, often to their detriment. They put their financial situation, and their emotional well-being at risk to avoid doing something they know they will be judged for doing, even though it can help them.
Suggested Alternatives to Bankruptcy
Many of the warnings about bankruptcy are accompanied by suggestions or alternatives you might take instead of filing. These include curbing your current cost of living, getting a second job, or contacting creditors to negotiate your existing debts.
Unfortunately, these suggestions don’t work for everyone, especially those who are deep enough in debt to seriously be considering bankruptcy. Not to mention these suggestions fail to take into account the health, age, or specific circumstances of the debtor.
For some people, alternatives to bankruptcy are merely delaying the inevitable and actually worsen the situation.
Can You Negotiate with Creditors?
Take the example of negotiating your existing debt with creditors. It seems easy enough. You can do it even if your health is poor or you can’t secure a second (or first) job. You should be able to do it right from the comfort of your living room couch, or so the bankruptcy warnings claim.
But just because it’s easy to try to negotiate with creditors doesn’t mean it will work. Nor does it mean it will pay off long-term.
In many cases, creditors refuse to negotiate with you. In others, even if you can negotiate better terms on a loan, you’re unable to afford those re-negotiated terms, too. This article from The Nest explains why negotiating with creditors and using loan modification and debt settlement can be a mistake if you’re suffering financially.
Negotiating with creditors can leave you stretched too thin and facing the same fate as before, just a few weeks or months later down the line. Not to mention, if you used savings to pay under the terms of the renegotiation, you’re worse off than you were when you started because now you’re deep in debt with no savings cushion.
Ignore the Scare Tactics and Seek Sensible Advice
Other warnings against filing for bankruptcy include damaging your credit (it’s damaged every day you are behind on your debt), losing your assets (many of them are protected through bankruptcy exemptions), and making it impossible to ever own a home (simply not true, though the process looks different for someone who has filed).
These are scare tactics used to prevent you from filing even when filing would be in your best interest.
So how do you decide what’s best for you?
You take a long hard look at your specific circumstances, discuss those circumstances with an expert, and go from there.
Granted, bankruptcy isn’t right for everyone. But it’s also not something that should be written off because it’s drastic. For many people, something drastic is exactly what’s needed to save the sinking ship.
If you’d like to know more about bankruptcy or you’re concerned the information you have about the process is misleading you into making a mistake, we can help. Contact the Tampa areas Bankrutpcy Law Offices of Robert M. Geller at (813) 254-5696 to schedule a free consultation.