Is It Time to Think About Bankruptcy?

While the timing for filing for bankruptcy may not be right NOW, the time to talk to a bankruptcy attorney IS now, so you can take full advantage of the financial protections that bankruptcy law can provide, and not make "financial mistakes" in the next 18 months.

Bankruptcy as Part of Your COVID-19 Financial Plan

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Some people plan for a rainy day. Few are prepared for a monsoon...

You may never have thought about bankruptcy as something you might need. But you may be facing financial challenges like you've never experienced before. Before the Coronavirus pandemic hit the US, a sizeable portion of the country was already "two paychecks away from bankruptcy"...

Well, those two weeks are coming soon for millions of people in this country if the government does not continue generous stimulus packages. So far the $600 per week supplemental unemployment benefits to millions of a Americans has been a godsend and kept the economy afloat.

Planning for an uncertain future

Its more important than ever, In these uncertain economic times, that you understand what rights you have under bankruptcy law, as you weigh your financial options over the coming months.

For now, bankruptcies are down, because...

  • collection efforts have been held back and
  • stimulus payments have given people a life raft, and.
  • bankruptcy deals only with past debts, not future debts,
    • most people are facing the prospect of lots of debts still ahead, but debts incurred today have not ripened yet into court judgments and wage garnishments

Most bankruptcies happening now are about pre-pandemic, past debts, some of which were incurred in the last recession. People already facing wage garnishment and creditor harassment from those against them.

Learn about bankruptcy law NOW, to protect what you have, going forward

While the timing for filing for bankruptcy may be "not yet," the time for learning your rights under bankruptcy law talk to a bankruptcy attorney IS NOW.

Far too many people make foolish financial decisions in the year preceding their bankruptcy.  The debts you are incurring today may not ripen into wage garnishment until next year. Nevertheless, it's crucial to understand how those debts are treated under bankruptcy law, today, so you can take full advantage of the financial protections that bankruptcy law provides in the coming year.

Don't make foolish "financial mistakes"  in the next 18 months. You need to "play defense" to protect what you have to keep you and your family safe in these difficult times. [more]

As bankruptcy veteran Cathy Moran explains, bankruptcy is part of a comprehensive financial survival strategy, not a "last resort." 

Bankruptcy is not the last resort

"Bankruptcy offers a swift and certain remedy for overwhelming debt. The biggest tragedy I see in my law practice is people who struggle far too long with debt remedies that are doomed from the beginning...Bankruptcy is an option to be considered alongside other debt options, from the beginning...While bankruptcy is not to be used lightly, it is not a last resort."

Plan Now - File Later

Several recent news stories have discussed how it would be wise for people to think about bankruptcy now rather than later, even if you're not going to file for a while. It helps to think about it now so you can plan for it.

What others are saying bankruptcy as part of your COVID-19 financial strategy 

As financial columnist Liz Weston recently wrote for NerdWallet, 

"If you’ve lost your job or struggle to pay your debt, you may need to file for bankruptcy. If that’s the case, you should ignore some common financial advice and start thinking defensively."

She emphasized these four points:

  • don't spend your retirement money
  • don't accumulate cash
  • talk to a lawyer now rather than later and
  • relieve your stress -- it's good for your health.

There are many ways you can minimize your losses through bankruptcy.

All of these experts make the same basic point:

You don't have to be completely broke to go bankrupt.

Think of bankruptcy as a way of preserving what you have so that you can make a fresh start, and not be dragged down for the rest of your life by debt that was incurred through a one time mishap.

Exempt property

You don't have to be broke literally to go bankrupt. You get to keep a certain amount of assets they called exempt assets. In the case of retirement property those assets can be sizable. That is to say you can declare yourself bankrupt even if you have $1 million in retirement assets. Your creditors can't touch that, even in bankruptcy.

Retirement accounts protected up to 

Bankruptcy law protects over $1 million in retirement assets. That is to say you are legally "insolvent"  even if you have over $1 million in retirement assets.

Your creditors can't touch that money in bankruptcy. The law wants you to save your nest egg. That's why they passed laws to protect it.

Don't wait to talk to a bankruptcy attorney

So wait to consult with an attorney only after you have squandered the very assets that could have been saved by declaring bankruptcy. 

Talk to an attorney now, if you think bankruptcy might be a possibility later. Don't make costly mistakes in the time before you file.  Bankruptcy is a powerful tool, but only if you use it wisely.


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