f you're thinking of filing for personal bankruptcy, I suggest you reconsider.
Are you thinking about filing for personal bankruptcy? Let me show you how to avoid bankruptcy and get those pesky creditors from calling you ever again!
But before I tell you why, I'd like to tell you a quick story:
More than a decade ago, I filed for a business bankruptcy, and it was one of the worst choices of my life.
I felt numb...
I felt shame...
"What about credit... how would I survive?"
In addition to being far in the red and dead broke at the time, I considered a bankruptcy filing as my only option.
After listening to all of the wrong people, I tried to save my business and filed my small business bankruptcy.
Filing Chapter 7 bankruptcy was one of the biggest mistakes of my life. I never had to go bankrupt. And in most cases, you don't have to either.
All you need is a little (non legal) advice. I wish someone told me the following:
Your lawyer loves declaring bankruptcy
The only people who win in bankruptcy court are the lawyers. Before filing bankruptcy, they get paid upfront and make hundreds and hundreds of dollars per hour as most of the bankruptcy reorganization proceedings are fully computerized.
A paralegal fills out your going bankruptcy details into a computer, presses a button and the paperwork flies out of their printer in less than 15 minutes.
You're never going to get honest advice about filing a bankruptcy from a lawyer because honesty doesn't pay for the BMW lease payment.
Keep this in mind if you're still thinking about filing bankruptcy.
You can't erase tax debt
Whether you're declaring bankruptcy or not, taxes are (generally) not protected by a filing. The Bankruptcy Reform Act of 1978 did not cover any tax-related debts... so you're going to owe no matter whether you get help filing bankruptcy or not.
The same is often true with student loans, child support obligations, or criminal fines -- in most cases filing chapter 7 bankruptcy does not eliminate these debts.
And secured loans like your car and house are not protected after filing for bankruptcy. So you'd still have to make payments on those items if you wish to keep 'em.
The big black mark
It's a myth that you earn a clean slate after just 7 years... it's actually 10 full years.... even more if a bankruptcy trustee slaps a "bankruptcy restriction order" on your case... it's given to you if the circumstances leading to your insolvency were activities deemed "careless" like gambling or speculation. If this happens, your name remains on the bankruptcy filing records for a period of a full 15 years.
But wait... it gets even worse: If over the past 6 months you've given monetary gifts or paid off family loans, the bankruptcy trustee has the authority to seize this money back and pay off your creditors! How embarrassing is that?
There's no guarantee you're going to be approved for declaring bankruptcy
Get this... if any of your creditor's appeals your bankruptcy filing (and that happened to me), you might not get approved! It gets even worse... filing for bankruptcy that gets denied stays on your credit record even if it doesn't result in bankruptcy.
There is no debtor's prison
No one has to worry about going to prison because of not being able to pay overdue debts.
With that said, you might be able to pay off your debts within a few years while maintaining a reasonable standard of living. Because credit after bankruptcy is a lot worse than working with your creditors in lieu of declaring bankruptcy.
If I had to do it all again, I would have simply closed my business and worked with my creditors instead of going bankrupt...
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