Most people who come to see us about bankruptcy do so at least a year, sometimes two to five years, after they could have (and probably should have) filed. Waiting to file and struggling to make minimum payments or robbing-Peter-to-pay-Paul by paying on one credit card with another causes not only financial damage to your credit score and personal wealth, but also emotional strain to yourself and your family.
Though using creative financing to keep your head above water may seem like a good idea at the time, it can do irreparable damage. Many debtors don’t realize that the bankruptcy system is intended to preserve a reasonable amount of your personal wealth so that you aren’t penniless when the bankruptcy is over. Therefore, without fully understanding what the law protects, people often cash out protected assets like retirement accounts and use the money to pay unsecured debts like credit cards, personal loans and medical bills — not realizing that unsecured debts are typically discharged in bankruptcy, while retirement accounts typically survive bankruptcy to provide a secure retirement for the debtor. Similarly, some debtors attempt to stay afloat by consolidating unsecured debts like credit cards and personal loans into a first or second mortgage that is secured against their property and cannot be discharged in bankruptcy without surrendering their home. After the debtor’s bankruptcy is complete, these folks’ personal wealth is less than it would have been if they had filed sooner rather than later.
At the same time, the constant stress of stretching a dollar and coming up short each month with no end in sight takes a toll on body and soul. According to a 2013 study by the Institute for Divorce Financial Analysts, financial issues are the number one cause of marital conflict, and the nation’s third leading cause of divorce (22%), after basic incompatibility (43%) and infidelity (28%). Study upon study shows that financial stress is a leading contributor to heart ailments, depression, anxiety, addiction, as well as PTSD, domestic violence, and even suicide. Why would anyone want to stay in such a stressful situation juggling finances and dodging bill collectors when they could easily get the relief that the law provides? Sometimes it’s pride or the thought that “our luck is bound to turn,” but often it’s just habit, fear of the unknown, or lack of knowledge about what bankruptcy really entails and the relief it provides.
Before you squander your personal assets and your physical and emotional health, it pays to talk to an experienced bankruptcy attorney. Contact us at Norrell & Powers Norrell, LLC for a discreet, informative conversation about your options. You may find that the time has not yet arrived for you to file bankruptcy, but you may find that the time is here to recapture your financial and personal well-being.
Mandy Powers Norrell is a Lancaster SC bankruptcy lawyer with over 20 years experience in Chapter 7 and Chapter 13 bankruptcy cases. This post is provided free of charge for general information only, and not as legal advice for your particular circumstances. To schedule a $25 bankruptcy consultation, please contact us.