Many clients that come to see me for a consultation tell me that they feel like bankruptcy is their last resort. However, this really isn’t true. Bankruptcy is both a shield and a sword. Bankruptcy can protect certain property from creditors. It also stops all creditor enforcement proceedings.
A last minute decision to file could limit your options and, if you wait too long to file, could cut off your rights to certain property you otherwise could have saved. Here are six signs you may have waited too long to see a bankruptcy attorney:
FORECLOSURE: After your home has been sold at foreclosure sale, it is too late to cure the arrearage and/or reinstate your mortgage in Chapter 13 bankruptcy.
REPOSESSION: If your car has been repossessed by the lender, it may be possible to get it back and include it in a Chapter 13 bankruptcy payment plan, but you will have to move quick! Many states have a deadline of less than two weeks from the day of seizure. After it is repossessed, you may have to pay for the tow truck, storage fees, attorney fees and up to six months of insurance. It is certainly better to file your chapter 13 payment plan bankruptcy before the car is seized.
GARNISHMENTS: Once a creditor has garnished your paycheck or bank account, your cash flow may be cut-off or severely reduced. If you wait to file when your accounts start to be garnished or attached, you may not get your money back, but Bankruptcy will stop future garnishments.
TAX LIENS: A lien by the IRS attaches to all your property. They can seize almost everything you own. A bankruptcy filed prior to the filing of an IRS lien stops the IRS from filing a lien at all. You can repay the taxes you owe in a chapter 13 bankruptcy. If a lien is filed first, in most instances, you will have to pay back the entire tax liability
PAYDAY LOANS: Once you authorize a payday lender to take funds from your bank account, you end up with little or no paycheck and often find yourself borrowing again and again to pay one payday loan with another payday loan. Filing bankruptcy will stop this cycle.
DEPLETING RETIREMENT SAVINGS: Cashing in your retirement fund to pay debts might seem to help temporarily, but the funds run out and you pay a tremendous price. You forfeit a large portion of your withdrawal to taxes. You will be swapping debts you could get rid of in bankruptcy for tax debt you must pay. Even worse, you will be borrowing from your future.
If any of the above scenarios seem familiar to you, it is time to seek the advice of an experienced bankruptcy attorney. I offer a free consultation to all first time clients. Remember, bankruptcy is not a last resort; it is there to give you a fresh start.