You know that bankruptcy is coming. You owe $25,000 on various credit cards. You lost your job through no fault of your own — the company went under and all the employees lost their jobs — and now you’re just working part time.
As a result, you can afford to pay about half of what you owe every month. Things are not looking up. You have made an effort to pay off the money that you borrowed, but you know you will never get there without some blind luck — like a winning lottery ticket.
So, how fast should you file? Should you start the process tomorrow, or should you keep trying to pay what little you can and put it off for a little while longer?
Typically, experts advise that you move quickly once you know that filing is the best financial decision in your situation. If you qualify for Chapter 7, you are going to liquidate your nonexempt assets and than have the debt eliminated either way. There is little reason to keep throwing small payments at that wall of debt for a few months just so that you have less to eliminate.
Plus, you may not even have less. What type of interest rates do you have? How much is the fee for a late payment or not making a payment at all? Are you adding new debt to the card? If you wait a few months to file, your debt load may just climb.
In a financial disaster, bankruptcy is sometimes the best option for a fresh start. Make sure you know what legal options you have and how to begin.
Source: Money Talks News, “Ask Stacy: Should I File Bankruptcy? If I Do, Should I Feel Guilty?,” Stacy Johnson, accessed April 12, 2018