Sometimes Bankruptcy isn’t the Answer


We’re always going to give you our honest opinion regarding your circumstances so that you can get the results you need in the most effective manner. Sometimes that means we’ll tell you that you don’t need to file for bankruptcy, even if you think you do, or even if you really want to.

Filing for bankruptcy can seem like a magical, “get out of jail free” card. Fill out some papers and voila! All of your money troubles will be gone.

There are several things wrong with that line of thinking.

First: A bankruptcy discharge is not the way to go if you need help paying for every day bills and expenses. It’s a common misnomer that filing for bankruptcy will get you out of paying for your living expenses indefinitely. The truth is that a bankruptcy (if granted discharge) only has the power to wipe out debts you’ve accumulated before and up to the date of your filing.

If you are granted a Chapter 7 bankruptcy discharge, your case will be assigned a bankruptcy trustee. The trustee is not working for you or against you; s/he will simply work to liquidate as many of your assets as possible in order to pay off your creditors. Luckily, you will not have to give up anything that is considered “exempt.”

As soon as you are granted a bankruptcy discharge, all debts (and day to day expenses and bills) acquired after that are your responsibility. A bankruptcy only helps with past debts. Once you file for bankruptcy, you’ll need to make some significant life changes so that you are able to pay your bills rather than have them continually turn into overdue debts. It’s smart to work with an attorney who specializes in bankruptcy and credit counseling in order to build a better financial plan for the future.

Second: Although carrying a significant amount of debt will ultimately drag your credit score through the mud, filing for bankruptcy is not the answer to raising your credit score. In fact, filing for bankruptcy will substantially lower your credit score even further, because ultimately, it means that you were unable to make good on money you owed.

While it’s true that you can slowly build your credit score back up again after a bankruptcy, if your main goal is credit repair, there are many other solutions that will be a much better fit for your needs.

Third: Bankruptcy is reserved for those who have significant debt. If you’re simply looking for a way to make your life a little easier or to free up some of your money – you might not even qualify to file. You’ll have to prove that you actually need to file for bankruptcy by providing the court with statements of your monthly income and expenditures. The court may decide that you just don’t have enough debts (or you have too much income in comparison to your debts) to qualify for bankruptcy. If this happens, your case can be thrown out or you might be required to repay your debts through the legal system.

Remember: as soon as you file for bankruptcy and are granted a discharge, you won’t be able to file again for eight years. If your discharge goes through and the next day you have a medical emergency and no health insurance – that debt will be yours to pay.

If you’ve found yourself struggling to pay your bills, you may have considered filing for bankruptcy. In order to know if it’s the right choice, seek the advice of a NJ bankruptcy attorney near you. Our office will consult with you about your financial troubles free of charge, as will many bankruptcy lawyers in New Jersey. Additionally, you can educate yourself about filing for bankruptcy by reading as much information as possible here on our bankruptcy blog.


Image credit: sboneham

3 Responses to Sometimes Bankruptcy isn’t the Answer

  1. Pingback: Can I Change my Mind After I File for Bankruptcy? | Veitengruber Law

  2. Pingback: Bankruptcy Attorney Fees: Why They’re Worth Paying | Veitengruber Law

  3. Pingback: How to Recognize a Credit Repair Scam | Veitengruber Law

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