Should I File for Bankruptcy?

“Should I file for bankruptcy?” This is the question that most of my clients want me to answer for them. Most people don’t want to file for bankruptcy—as I often tell clients, they would rather have a root canal without anesthesia then have to call a bankruptcy lawyer—but sometimes not only is it the best decision, it is the only decision. How do you know?

First, it generally is not a decision you should make by yourself. You need to get the input of others. People often talk to their family, friends, and even their minister, pastor, priest or rabbi before talking to me. Sometimes, though, it is hard to discuss your financial problems with someone you know. Rest assured, bankruptcy attorneys won’t think less of you for calling. We have usually “seen it all,” and doubtless have handled cases much worse than yours. And we are qualified to review your situation and give you our recommendations as to what is the best course for you to take.

Second, you should look at the danger signs that you’re overextended and in trouble. Recognizing the problem early lets you act sooner, and have more options available to you.

Third, almost all of our clients see us later than they should. Financial difficulties usually don’t happen overnight. Although the incident causing the problem can occur suddenly—job loss, illness, separation—there are short-term fixes that can relieve the pressure. Working overtime or a part-time job, dipping into retirement, living off your credit cards, all in the expectation that things will turn around soon, are ways to make a bad situation even worse. Many of my clients enter a difficult financial period with savings and a retirement account, and by the time they see me they literally don’t have enough money to buy groceries…and a tax liability for the early withdrawal of the retirement to boot! These people would have benefited greatly from seeing me before the savings and retirement are gone, had more flexibility and options, and been better able to get a fresh start after their bankruptcy case ended.