30 Apr Is Bankruptcy The Right Decision? (Part 4)
Most of my clients come to me only as a last resort. They don’t want to file bankruptcy, are worried about the “stigma” that it might have on their life, and wondering whether or not the cost, both financially and to their credit score will be worth the benefit.
That, I think, has to be the key determination: is the relief they’re going to get from filing bankruptcy worth the price they will have to pay? By price, I include not only the economic costs, but the cost to their credit score, and the moral expanse.
Most people want to pay their debts, and are only speaking with a bankruptcy attorney because they’ve become overwhelmed. For those people, and almost all of my clients, their credit is in bad shape already, and bankruptcy will make it better in the long run, not worse. As to the cost; the interest that is mounting up on their unpaid credit cards or medical bills will quickly outweigh the court’s and attorney’s fees.
The hardest question is the moral expanse? Most people feel an obligation to pay their debts. That’s a good thing. But filing bankruptcy and getting rid of abusive credit card charges, or unanticipated catastrophic medical expenses, is hardly the same thing is not paying your brother-in-law for lending you that $20 at the ball game. When my clients stop and analyze the amount of money they’ve paid to the credit card companies in interest, late fees, and finance charges, they realize they’ve paid for their purchases many times over.
If you are faced with the problem of whether to file or not, take a look at what you’ve paid to the credit card companies in the past year. Then go sit down with a competent bankruptcy attorney and talk to him or her about the benefits versus the costs of filing.
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