Is Bankruptcy Your Best Investment?

by Cathy Moran

Spend money, when you're broke, to go broke?  Seems counter-intuitive, but it could be the best money you spend.

Fear, pride, uncertainty, stubbornness, distraction, and cash flow keep people from getting their financial life  in order with a bankruptcy filing.

As a means of regaining control of your life and your pocketbook, however, it may be the best move you can make.

Inaction, however unpleasant, is easy.  It's familiar and tolerable.  Like it or not, it's a safe choice.

You can't get more hurt by doing nothing, right?  It's the devil you know, as opposed to the devil you don't.

But what if the alternative is getting out from under your bill problems and jump starting your financial life?  Clearly, in that case it becomes far more attractive to leap than to stand still.

So if you're having bill problems and are on the fence, these ten reasons that filing bankruptcy now may help you make your decision.

1. The stress of bills you can't pay, collection calls, and worry about garnishment can ruin your health.
2. Current law and depressed property values may allow the voiding of junior liens on  your home.  If values increase in future, this opportunity may be unavailable.
3. No tax is generated by discharging debts in bankruptcy;  not so, if you settle debts outside of bankruptcy.
4. You can keep more of your assets when exemptions are applied to investments with depressed current value.
5. The federal tax exclusion for cancellation of debt on foreclosures of principal residences expires in 2012, is limited in scope, and doesn't deal with state taxes.
6. Your credit report doesn't start healing until the debts are paid off or discharged in bankruptcy.
7. Relationships suffer in times of financial distress.  Save your marriage, ditch your debts.
8. Anonymity in numbers:  there have been lots of bankruptcy filings over the past several years.  Your decision to file now makes you one of a crowd of people with the same problem.
9.  Wait to file  until your income improves and the means test may require that you file a repayment plan.
10. You aren't getting any younger:  chances are you are poorly prepared for retirement.  Every dollar spent making minimum payments is a dollar you're not saving for retirement.

For most of those buried in debt, neither inaction nor incremental solutions will solve the problem.  Many of the "reasons" that hold people back from the bankruptcy solution are based in myth and misunderstanding.  Think through my list, follow the links to read more, and imagine a life free of dischargeable debts.

See a bankruptcy lawyer and explore how these principals apply to your situation.  The financial return on a bankruptcy filing is eye popping.

For more information, please call our office at 305 548 5020.

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