Bankruptcy: When is it the Right Time to File a BK?

June 4, 2010 - PRLog -- Recently I met with a potential client who was somewhat distressed about her financial situation. Like most clients she had an idea of what Bankruptcy was about, but possessed limited knowledge of how it related to her case.

Her concern involved unsecured debt, mainly credit cards. As a full-time student, she used certain credit cards to help support her and her family while attending school. In addition to credit card debt, she had Federal Student loans, of which she was already aware that those types of debts cannot be discharged or handled appropriately through the bankruptcy process.

Most would have advised this individual to file a Chapter 7 without seeking further options. However, even though this individual qualified for a Chapter 7 Bankruptcy matter, she was unsure that filing a bankruptcy would be in her best interest. After I explained that with a Chapter 7 bankruptcy case one gets a “fresh start” and detailing the certain guidelines upon filing a Chapter 7 case, the client was more aware of what options were available but still concerned that her only option would be to file a bankruptcy case.

After explaining to her the “ins and outs” of bankruptcy, I finally explained that if she did not want to file a bankruptcy case, she could always seek alternative avenues. Such alternatives would include calling each of her creditors and trying to arrange a payment plan whereby she would make a monthly payment that she could afford, possibly without interest for a period of time until she could afford to increase payments to the creditors. In addition, she could draft a settlement letter to be sent to her creditors in order to settle the debt for a % of the debt owed allowing her to be free from the debt after the amount agreed upon was paid in full. Finally she could just plain ignore the creditors and hope they would go away, which is not always a better option or alternative to filing a bankruptcy case.

Meeting with this client illuminates and important question– when is it time to file a bankruptcy? Although as attorneys our goal is to provide relief to our clients and to give them the chance for a new beginning by filing a bankruptcy for them, we must always take into consideration that not every individual is ready to take on the daunting task of filing and completing an individual bankruptcy case. Thus, it is not only our responsibility to file cases, but sometimes to suggest alternative routes as well.

For more information visit http://www.bankrupcy-alternative.com or call us directly.

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