Occasionally, we meet with people who are convinced that bankruptcy is their only option, but after reviewing their circumstances, we say otherwise. But in all honesty, most of the people who come to us are right. Not only is bankruptcy their best option, but it’s something they should have done months if not years earlier. If they had, they could have saved a small fortune.
But this post isn’t about those who should file bankruptcy, it’s about that small percentage of folks who walk in our door and we advise them not to file for bankruptcy. Here is a list of the reasons why a debtor is better off NOT filing a Chapter 7 or Chapter 13 bankruptcy:
1. The debtor can afford to dig out.
This is very rare, but every once in a while, someone wants to file bankruptcy just so they can wash their hands of their debt, but they can actually afford to pay it off. Compared to the individual’s income, the debt is relatively minimal.
A good way for someone to do the math is to take their monthly take-home income and minus all of their monthly expenses. If there’s still a good amount of money left over, they’re probably better off paying the debt down than filing bankruptcy and letting it affect their credit for the next 10 years.
2. Your debt can’t be discharged in bankruptcy.
Certain types of debts cannot be discharged in bankruptcy, such as most student loans, recent tax debt, spousal support, child support, court-ordered fines, and victim restitution. If your debt is predominantly in one or more of these categories, it’s unlikely bankruptcy will help you. But it’s still wise to speak with a bankruptcy attorney to confirm that the lion’s share of your debts cannot be included in bankruptcy.
3. Your assets will be liquidated in bankruptcy.
Suppose you have “extra” assets that you don’t necessarily “need” to survive but you want to keep because they’re good investments, such as a vacation home, a boat, or land. If you want to file a Chapter 7, debt liquidation bankruptcy, your non-exempt assets will be liquidated (sold) to repay your debts. If you believe that you need bankruptcy, talk to a bankruptcy lawyer ahead of time to find out which assets are at risk of liquidation.
Related: Bankruptcy Mistakes to Avoid
Looking for a Rancho Cucamonga bankruptcy attorney? Contact Nguyen Law Group today to schedule a free case evaluation.