Very often, the advice I give to a prospective client at an initial consultation is to stop paying their credit card bills immediately, whether they plan on filing a bankruptcy case or not.
“Will I ever be able to get credit again? But they’ll keep calling me until I pay, right?” These questions are asked almost immediately upon delivering the advice, like an echo.
Allow me to take those one at a time. The first answer is yes, you will still have credit available. Credit cards and car loans are generally available immediately after filing a bankruptcy case. Home loans are a much bigger challenge in today’s market, and if you plan on buying a house immediately, you need to speak with a professional about that. Generally, you can’t buy a house for at least 2 years, and you will need 4 years before you can expect a conforming interest rate.
When you stop paying credit cards, you will probably start receiving calls. If you hire a bankruptcy attorney, you can tell those collectors to only contact your counsel. Once you file a case, an automatic stay comes in to effect, absolutely prohibiting collection calls. If you do not hire an attorney, or file a case, remember the collectors only get paid if you write them a check. That’s why they try to annoy, harass, embarrass, and scare you into paying them money.
What is the benefit of not paying credit cards? I think there are two HUGE ones.
First, with the money which would go to minimum payments, you can spend it on health care for your family, better groceries for your family, and even renting a better place for your family to live.
Second, with that same money, you can start feeding your retirement account instead of a bank executive’s million-dollar annual bonus fund (the credit card companies). Almost nobody works until the day they die, so saving for your retirement is a great thing to do to reduce the burden on your family down the road.
If you would like to talk about the specifics of your situation, and live in Western North Carolina, do not hesitate to contact me for a free, initial consultation.