As an Asheville bankruptcy attorney, I spend the majority of my time during initial consultations speaking to clients about the negative consequences of filing a case. Most people understand the benefits of discharging unsecured debt through a Chapter 7 filing, or catching up on mortgage payments through Chapter 13. However, some of the most rewarding professional work I do is refocusing a bankruptcy client on the challenges that lie ahead whether they file a case or not.
Potential Client’s Concern: Credit Score
A bankruptcy filing is a hard hit to your credit. Credit scores are an important part of our lives because they determine how much we pay for houses, cars, etc. However, many clients needlessly worry about protecting a score which is already damaged significantly. A bankruptcy case can stop the 30 and 60 day late payments being reported which tend to occur month after month. The truth is that bankruptcy can be a positive first step in rebuilding your credit worthiness, and I frequently speak to former clients who have improved credit scores a year after their filing.
My Concern: How is the client going to pay bills moving forward?
In Chapter 7 or 13, forming a budget is critical to getting the most out of a bankruptcy case. In Chapter 7, many debts are discharged, but only those which are incurred before the date we file the petition. It makes little sense to file a Chapter 7 case without a solid plan for avoiding debt in the future. I encourage clients to imagine all their credit card, medical, and personal loan debts vanishing. Would they be able to pay their other bills? If so, they might be a good candidate to file a case. In Chapter 13, it’s simpler. If you don’t make the payments, your Chapter 13 plan can be dismissed. In either case, forming a budget is critical before deciding whether a case is right for you, long-term.
Potential Client’s Concern: Who will find out? Will I lose my job?
Bankruptcy cases near Asheville and in Western North Carolina are generally not published in the newspaper. Although it is public information, the only people who will usually find out are your creditors, the trustee, and whoever you tell. Your current employer might not find out about the filing, but if they do, that information will most likely not affect your job status. Possible exceptions include financial sector jobs which involve handling money.
My Concern: Filing a Bankruptcy case may impact your self-esteem.
Filing a bankruptcy case requires a certain amount of letting go. Nobody wants to file, and nobody ever thinks it is going to happen to them. However, a bankruptcy case can be a powerful financial tool to help you rebound after you have already arrived in financial distress. Accepting your current financial position requires honest reflection, which can be painful, but being honest about your need for help can also aid your recovery.
Our shared concern: How am I going to pay for a bankruptcy case?
Any recovery strategy we discuss together at an initial consultation will include discussion about the fees necessary to file a case. I do not recommend spending money on a bankruptcy case which is needed for necessities: food, shelter, utilities, and healthcare. By working on a budget together, and determining which creditors you should be paying, we can usually come up with a good strategy for getting the fees paid.
Whether you file a case or not, I would be pleased to be a source of information. If you live in Western North Carolina and are ready to set up a free initial bankruptcy consultation, contact me to reserve a spot on my calendar. A consultation takes about 30-45 minutes.
*The information contained on this website is not intended and does not constitute the providing of any legal advice or any legal opinions or services to any user thereof. The information available on or through this web page is not intended and shall not be used as a substitute for the advice and consultation provided by an attorney. Any factual examples used to illustrate concepts are hypothetical and do not depict actual events or real persons.