While it is true that filing a bankruptcy petition will assist with a repayment plan or complete elimination (depending on the type of debt and the Chapter of bankruptcy), I believe that the future is also very important to bankruptcy. Why? Because, if you can help it, you don’t want to end up with financial difficulties again.
Time and time again people come in to Halcomb Singler to meet to discuss bankruptcy. Often these people are in a really difficult financial situation including a recent job loss or a divorce. This information is very significant to a bankruptcy attorney because if a person has lost a job or has recently been divorced there is a high probability that he or she has suffered a serious income setback. Bankruptcy is a great way to fix a debt problem, but it doesn’t do much at all to assist with income. As a result, it is not uncommon for me to advise people in this situation to wait to file bankruptcy until they have been able to obtain a job or increase their income in some manner. The last thing that I want to do is to advise a person to file bankruptcy when they don’t have enough money to make ends meet.
It is especially important to be in a situation where you have enough money to get by when you file bankruptcy for several reasons. First, you cannot include new debts in a bankruptcy once the petition has been filed. So, if you don’t have enough money to meet your living expenses each month, you are just going to get right back into debt even though you filed a bankruptcy petition. Second, if you get behind on expenses and incur more debts you probably aren’t going to be entitled to another bankruptcy discharge very quickly. In fact, the time necessary to wait between Chapter 7 bankruptcy filings prior to obtaining another discharge is currently eight (8) years. (It was 7 years prior to 2005, but it is currently 8). It is much better to delay a bankruptcy filing until you are in a position to make ends meet than to get right back into debt because you filed too soon.
Lastly, I see bankruptcy as an opportunity for a person to get back on their best financial path. I review considerations including obtaining life insurance, increasing life insurance coverage, 401(k) or other retirement plan contributions, building an emergency fund and decreasing expenses when possible with bankruptcy clients. Bankruptcy is sometimes a necessary tool, but for those who need to use it I want them to be in a much better financial position on the other side of bankruptcy. Rather than have people unsuccessfully attempt to pay off credit card debt for ten (10) years only to end up in bankruptcy, I would prefer to meet with them in year (2) so that we can get their bankruptcy filed and get them saving for retirement again. After all, there isn’t a loan available for retirement when you don’t have any income. And, contrary to what people often tell me, your health doesn’t always allow you to work forever.
By either filing bankruptcy now or even by waiting and filing bankruptcy later, many people will find themselves in a better financial position in three to five years than they had ever had prior to bankruptcy. Filing bankruptcy is more than just filling out some forms. The advice of an attorney in bankruptcy should do more than just get you through the bankruptcy without losing any assets (unless you were advised this would occur prior to filing). Filing bankruptcy with an attorney should help set you up for success post-bankruptcy. Remember, a bankruptcy attorney has filed hundreds or even thousands of bankruptcy cases. They see the personal expenses of individuals and families on a day to day basis. Their experience can really assist you in identifying how you can improve your financial situation after bankruptcy. And, a bankruptcy attorney can also tell you when filing bankruptcy isn’t in your best interest.
If you live in the Indianapolis, Indiana area and are considering filing for bankruptcy contact Halcomb Singler, LLP for a complementary initial consultation at our Carmel, Indiana office at (317) 575-8222. We are conveniently located on Main Street just off of Interstate 31.