Clients often tell me that they considered filing bankruptcy before but didn’t go through with it. I ask them why and they respond with the same answers. Here are some common reasons why people don’t file bankruptcy:
- Filing bankruptcy is too expensive. The last person to tell me this reason for not filing bankruptcy sooner was making minimum payments to her credit cards in the amount of $900 a month. After meeting me she was able to stop making those payments and using the money that was going to pay interest to the credit cards she was able to pay off the cost of her bankruptcy in about two months. Filing bankruptcy is not expensive when considering the cost of not filing bankruptcy. She was able to discharge approximately $50,000 in debt for approximately $1,900 in attorney’s fee and court costs. That seems like a good trade to me.
- I am afraid of what other people will think when they find out I filed bankruptcy. I completely understand this fear. No one likes to be embarrassed. First of all, the only people that usually find out about a bankruptcy filing are the creditors and parties involved in the bankruptcy process. Your family, friends, and colleagues at work will most likely never find out that you filed bankruptcy. Information about bankruptcy filings is public record so if someone went looking for your case they could probably find it. However, they would have to have access to court records and know that there was something to find. It isn’t impossible for other people to find out but it is very unlikely that this would happen.
- If I file bankruptcy I will lose everything I own. Every state has a set of exemptions that allows debtors to file bankruptcy and keep certain types of property. In Texas we have very good exemptions and as a result most bankruptcy cases involve no liquidation of assets. This means that if you file bankruptcy you will most likely get to keep everything you own. For more information about exemptions in your state contact a local bankruptcy lawyer.