By Cathy Moran (Summary from Ms. Moran’s blog, link below to full blog post) Ms. Moran is a tireless champion for the education and protection of the consumer.
“Facing financial trouble, there are only three times when it makes sense to file bankruptcy. None of them is labeled “last resort”. Yet financial-advice gurus keep saying, bankruptcy should be your last resort.
That kind of thinking keeps people suffering too long, risking worse than financial embarrassment, and wasting money when repayment is a lost cause.
Putting emotions to the side, let’s walk through those three situations when filing bankruptcy is justified.
1. You have a crisis
Foreclosure, repossession, or wage garnishment threaten the foundation of your finances. Without a house, a car, and a paycheck, not much about day-to-day life is manageable.
Bankruptcy gets you a moment to consider the big picture, and provides the legal forgiveness of most unsecured debts. It’s the long term effect of the discharge that is precious.
2. You see the big picture
It doesn’t require a crisis to look at your balance sheet and realize you can’t dig your way out of a financial hole.
A lifetime of minimum payments on suffocating debt is no life. Keep making minimum payments and the debt doesn’t even die of old age, because payments extend the statute of limitations.
It doesn’t matter how got you into debt: most bankruptcies result from events the individual didn’t control, like job loss, illness, or divorce.
3. You’re worrying yourself sick
How we feel about owing money has a huge impact on physical and mental health… stress kills.
And stress makes us stupid: actually, measurably less likely to make good decisions going forward. Collection pressures force too many folks make foolish choices about which creditor to pay.
Reasons to file overlap
The sooner you look at the big picture provided by bankruptcy, the less likely you are to waste money trying to pay impossible debts or make catastrophic decisions like invading retirement or borrowing against your house to pay dischargeable debts.”
True story of retired couple who made wrong choices about who to pay.
MUSINGS BY DIANE:
Each of us have made really stupid decisions – whether it was choosing bad friends, a ridiculous vehicle, a very expensive stereo, or a job that we eventually hated. The realty is that we would not have made those same decisions if we had asked others for their advice (and listened to their advice).
As this article points out – stress makes us stupid. Financial stress can make us complete idiots (like the gambler who bets his last dollar of the rent money with the hope to pay off all debts). I have made my own mistakes and, for the most part, learned from them. What I finally learned was to follow my gut (use common sense). My goal in this website is to give you some tools to start down a path that works for you. I hope some of this information is helpful.
Diane is a well respected Arizona bankruptcy and foreclosure attorney. As a retired law professor, she believes in offering everyone, not just her clients, advice about bankruptcy and Arizona foreclosure laws. Diane is also a mentor to hundreds of Arizona attorneys.
*Important Note from Diane: Everything on this web site is offered for educational purposes only and not intended to provide legal advice, nor create an attorney client relationship between you, me, or the author of any article. Information in this web site should not be used as a substitute for competent legal advice from an attorney familiar with your personal circumstances and licensed to practice law in your state. Make sure to check out their reviews.*
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