Making the decision to file bankruptcy is not easy. I understand that as well as anyone. People are worried about what others will think. They’re worried about their future access to credit. They’re worried about whether they will lose any property. But the consequences of delaying the decision to file bankruptcy is so severe that debtors should ask themselves “What am I waiting for?” More and more, people are waiting until judgments have already been issued for delinquent debt or until a sheriff’s sale is imminent. Once a judgment is obtained, the creditor can begin garnishing wages or bank accounts and perhaps seize property. I hear all the time from potential clients that “I didn’t get any notice they were going to freeze my bank account.” But they did. The judgment itself puts debtors on notice that garnishment is coming. Even earlier when the lawsuit is filed debtors know that judgment and then garnishment is coming unless they have defenses to the lawsuit they intend to assert. If you own real estate, allowing a judgment to be entered can put a “cloud” on the title that has to be dealt with if you intend to sell or refinance. So why wait to file bankruptcy? Or why even wait until the lawsuit is filed? If you have significant debt that can’t be repaid, why wait until a creditor sues?
Delaying the filing of a Chapter 13 bankruptcy to cure a mortgage default can be even more dangerous. Too many people wait on mortgage modifications that never come or modifications that result in homeowners paying interest on interest or depleting equity in their home when the lender simply “tacks the defaulted amount onto the back of the loan” (lenders’ preferred method of dealing with mortgage defaults). When there’s a mortgage default, every day that passes without the homeowner having been able to make a monthly mortgage payment only increases the risk of losing the home. So why wait to file a Chapter 13 bankruptcy until the default has risen to an insurmountable amount? With Chapter 13 bankruptcy there’s no interest paid on interest and no depletion of equity.
I frequently tell potential clients there’s too much agonizing over the decision of whether to file bankruptcy. Life is too short. We have better things to do with our time and money and mental health. Stop agonizing so much and stop waiting until the consequences are severe. Contact Thompson Law Office about getting started on filing bankruptcy.