Should I file bankruptcy?
Letter to “Ask Leon”
Dear Leon:
I am contemplating declaring bankruptcy and need some guidance as to why I should do so, as opposed to trying to clear up my credit otherwise. I am also wondering why I should choose the services of a lawyer as opposed to doing it myself. Basically my situation is this: I have had 2 car repossessions and several other outstanding debts. I would guesstimate that my debts reach over $10,000 (not including student loans). I am soon to be married and am also worried about how my credit will now affect my fiancées credit if I do/don’t declare bankruptcy, as well as our ability to buy a house in 2-3 years time. Any assistance/guidance would be great.
Signed,
Clint
Leon Says…
Dear Clint:
The reason for you to consider bankruptcy is because it’s too late for you “to clear up your credit otherwise.” I assume you mean you want to make the bad stuff disappear. There is no, “otherwise” for clearing up how you already handled your financial obligations. You can’t erase the past and suddenly have great credit again. If there is such a way, we wouldn’t need any bankruptcy laws for individuals, because no one would ever need or want to use them. Even if you wrote a check tonight and paid off all your debts right now, your credit will still be terrible for a long time to come, and you will also be minus all of the money that you would have paid.
Bankruptcy is a solution for getting a person out of debt; there is no a roadmap to instantly cure years of credit neglect or bad luck. That said, many people do emerge from bankruptcy and soon regain credit, financing cars, even buying a home, but to make that happen, you have to make yourself “credit worthy,” with personal stability, good dependable income, and expenses that are kept under control.
If you decide to file bankruptcy, there is no reason for you to use a lawyer, unless you place a high value on having your case handled by people who know what they are doing; if so, go to an attorney with impeccable experience and credentials as a bankruptcy specialist. Many people try to handle their own case without a lawyer, and face disastrous results that could have been avoided. Most bankruptcy attorneys charge nothing for a consultation, and will adjust fees according to circumstances so that a potential client can afford this.
Finally, your debt problems will be a difficult burden on you marriage. I recommend that you resolve your debt issues before you marry; either get the debts paid off, or if you can’t do that then see a bankruptcy lawyer.