I’ve asked a well-respected bankruptcy attorney- my brother, Neil H. Ackerman, Esq- to add a few facts and comments on the bankruptcy issues I discussed yesterday. (You can learn more about his practice here.)
Maybe you owe more debt than you can ever repay unless you get an unforeseen tremendous bonus or raise, gift of money, or inheritance, or you win the lottery. You’re working as hard as you can. But you’re using every penny you earn to pay your necessary living expenses, such as food, rent or mortgage and gas, and to cover your minimum monthly payments on your credit cards, medical bills and other debts. You might even be using your credit cards that you’ve just paid to cover any shortfall. You’ve been able to maintain your credit rating and score because you pay your minimum monthly payments on your credit cards, medical bills and other debts, but you’re trapped in an endless cycle of spending all your disposable income to pay for your or your family’s monthly expenses. But paying these bills mean you are never able save any money. Worse, you still owe the same (or higher) total debt at the end of every month since your monthly payments are not really covering the interest and other charges.
Or maybe your situation is even worse. You’ve maxed out your credit card limits, or have almost borrowed your entire credit line. Your credit rating is dropping. Your income is no longer enough to cover your bills. You’re finding it harder and harder to make your payments. And you’re giving up hope that you’ll ever get out of this mess.
You’re thinking of borrowing from, or dipping into, your IRA, pension plan, or other retirement plan. But you’ll owe taxes if you do this, and you’re taking away from any the money you’ll have available to cover your needs when you get older.
Maybe you have to seek a mortgage modification, and you won’t be able to afford paying your other bills- even if your mortgage lender agrees to the modification.
Or you are sick or unemployed.
You might have lawsuits filed against you, or judgments might have been entered and filed against you and/or your home.
Your wages might be being garnished, or your bank accounts have been seized- or are subject to being seized any moment.
Your credit rating is “shot”. You’re constantly worried sick. You’re scared to answer the phone. Sometimes you feel like you can’t even think straight. Maybe you can’t get out of bed, or you can’t go to sleep. You wish you could hide away from the world.
You’re ashamed of yourself. You think you’re a failure and a loser.
You sometimes suspect you might be down for the count.
You need a way out; a fresh start, without these bills, debts, endless phone calls, worries.
You’ve heard about bankruptcy. Maybe you’ve even gone to see an attorney who has recommended that you file bankruptcy as your best option for you to get a fresh start in life.
But you’ve heard the scare stories: that bankruptcy will ruin your credit forever, and you will never be able get any credit if you file into bankruptcy.
So this option seems closed to you,too. You’re thinking, there’s no way out, no hope anywhere, no future for you. You feel like you’re stuck in the old commercial: “You’ve fallen and you can’t get up”, and there’s no chance you’ll ever recover from this.
You’re resigning yourself to living this way forever, or perhaps signing up with a debt consolidation agency, that you hope will follow through on its promises and not steal your money, and that you pray will be able to negotiate deals with ALL your creditors, under which you’ll pay all your disposable income after food and other living expenses, for several years, during which you can’t afford even the slightest emergency or else you’ll default on this, too.
Further, you might have to pay taxes on the debt you owe that is compromised and cancelled, and you may not have the money to do this..
STOP RIGHT HERE: THE SCARE STORIES YOU’VE HEARD ABOUT BANKRUPTCY RUINING YOUR CREDIT FOREVER ARE NOT TRUE. THERE IS HOPE.
You CAN rebuild your credit after Bankruptcy, even Chapter 7 Bankruptcy, if you take the right steps. YOU CAN EVEN QUALIFY TO GET A MORTGAGE TO BUY A NEW HOME WITHIN A FEW YEARS AFTER BANKRUPTCY, IF YOU TAKE THESE STEPS AND YOU OTHERWISE HAVE THE MONEY AVAILABLE TO MAKE THE REQUISITE DOWNPAYMENT, AND CAN SHOW THE INCOME NEEDED TO MAKE THE MORTGAGE PAYMENTS.
In fact, if you have debts you cannot otherwise repay, which will be wiped out through a discharge in Bankruptcy, you may find Bankruptcy to be THE best option available to you to rebuild your credit and to get a fresh start in life in the future.
A recent study by the the Federal Reserve Bank of New York concludes that “insolvent individuals who do not go bankrupt exhibit more financial stress than those who do” and “[t]he individuals who go bankrupt experience a sharp boost in their credit score after bankruptcy, whereas the recovery in credit score is much lower for individuals who do not go bankrupt.”
Many millions of people have filed for Bankruptcy in the US, and have turned their lives around as a result.
You can be one of them.