How Waiting To File For Bankruptcy Can Negatively Impact You

Filing for bankruptcy is a very personal choice and it’s never an easy decision. Even when drowning in debt, many individuals see filing for bankruptcy as a type of failure. Out of pride, they put off filing, not realizing that this decision can actually make their financial situation much worse. 

Waiting To File For Bankruptcy Can Negatively Impact You 

In 2018, the Notre Dame Law Review filed a report called “Life In The Sweatbox”. The sweatbox the report referred to is commonly known as the financial sweatbox, which is the amount of time between when a debtor realizes they should file for bankruptcy and when they actually file. For some, known as long-strugglers, this period of time was between two and five years. 

Data from 3,200 bankruptcy cases were reviewed for the report and it was determined that nearly 66% of all filers were considered long-strugglers. How did waiting to file impact their overall situation? The outcome, highlighted in the report, clearly showed that the longer someone waits the worse their financial situation becomes. For example:

  • The average debt-to-income ratio is over 40% higher for long-strugglers than those who filed earlier. 
  • Long-strugglers are much more likely to be served debt-collection lawsuits. Nearly half of all long-strugglers were named in a debt-collection lawsuit. 
  • The average assets owned by long-strugglers was half as much as those who filed earlier. 

The report also found that the most common reasons for procrastinating were the belief that by trying harder, the debtor could find a way to pay off debt and the stigma associated with filing for bankruptcy. 

It is true that there is a stigma associated with filing for bankruptcy, the reality is that this legal process gives debtors a way to feel financial relief and gives a second chance that can be used to rebuild credit. 

How Do I Know If It’s Time To File For Bankruptcy? 

If you’re thinking about whether or not you should consider filing for bankruptcy, ask yourself the following questions: 

  1. Am I Using Debt To Pay For Debt? If you can’t pay your debt without taking out additional loans or credit cards, it’s likely time to file. 
  2. Is Your Total Debt More Than 40% Of Your Income? The debt-to-income ratio is a way to determine if you’re in financial distress. 
  3. Could Declaring Bankruptcy Wipe Out Your Debts? The harsh reality is that some debts just can’t be wiped out by declaring bankruptcy. However, credit card debts and medical bills are examples of types of debt that can be wiped out.
  4. Are You Giving Up Essential Care? A shocking number of long-strugglers have admitted that while they were in the financial sweatbox, they went without essentials - like food. No one should ever have to starve because of their debt. 

If you answer yes to most of all of these questions, it’s likely time to file for bankruptcy. 

Consult With a San Jose, California Bankruptcy Attorney 

The best way to begin your journey toward financial relief is to contact a bankruptcy attorney who can help to guide you through the legal process, file the required paperwork, and negotiate with creditors. Joseph Camenzind, IV can provide that assistance and has dedicated his legal career to helping his clients find the legal solution that best fits their needs. Contact him today at (408) 882-9758.


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