As a lawyer who represents people interested filing Chapter 7 or Chapter 13 Bankruptcy in the Sacramento Metropolitan area I am often frustrated by the misinformation individuals receive surrounding the bankruptcy process. While bankruptcy remains a complicated legal matter and, as such, can be an unsettling consideration for just about any individual. I find that few people take it upon himself or herself to become better informed about the bankruptcy process from the numerous individuals who have previously sought relief under the Bankruptcy Code.
Peoples’ general lack of information about the bankruptcy process has created a stigma for many individuals which causes unnecessary anxiety and other problems for individuals who may be experiencing financial turmoil. As the Philadelphia Inquirer noted on December 26, 2010 life after bankruptcy is not the “financial desert” many individuals fear is a result of filing for Chapter 7 or Chapter 13. As a matter of fact, paranoia created due to this unrealistic fear of turning to the bankruptcy code for financial relief has drained too many individual’s assets that could have been preserved had the individual consulted with an attorney sooner rather than later in the process. Furthermore, individuals plagued with incessant calls from angry creditors could again return to times where they were unafraid to answer the telephone without fear of having to deal with annoying or harassing calls regarding unpaid debts.
While filing for bankruptcy is not free of long term consequences, in that the filing becomes a matter of public record that can stay on your credit report for a number of years, these consequences are often times softened compared to the combination of potential benefits a bankruptcy filing can have on an individual’s economic circumstances. Few people take into account that many people begin to receive offers for the extension of credit within a year after filing for bankruptcy (although these offers are often for minimal amounts and on bad terms for a borrower). There are studies which show that Debtors have been able to get home loans within two years of being discharged from their previous debts. This of course presumes that those individuals have taken the time to reestablish themselves financially.
On the other hand, the consequence of waiting too long to file for bankruptcy after a person has begun to consider the idea can be drastic. Often times an individual begins to liquidate his or her retirement assets in order to pay debts that could have otherwise been discharged and at the same time protect their retirement accounts. The decision to delay a bankruptcy filing also denies the debtor the protections offered by the automatic stay, which halts wage garnishment, eviction, foreclosure, car repossession, and other lawsuits. This halt can give a debtor enough time to regain his or her composure and figure out the best way to proceed financially.
In my practice as a Sacramento Bankruptcy Attorney I always encourage individuals experiencing financial distress to look at their economic outlook from a detached and objective standpoint as difficult as it may be. While it may be easier to ignore the financial problems looming against you, the lack of decision can lead to more problems in the future. Some individuals may be better equipped to use non bankruptcy alternatives to deal with the financial problems facing them. However, that determination remains a difficult decision to make without an attorney able to give his professional opinion on the matter.