This post is a tongue-in-cheek list of reasons why people would avoid filing bankruptcy or learn about their options.
Reasons To Avoid Bankruptcy Or Learn Your Bankruptcy Options
We’ve all seen the advertisements from debt consolidation and other companies (who, by the way, are owned by banks and credit card companies) instructing people with debt problems to contact them and avoid bankruptcy as an option. They give their self-interested reasons for their position, most of which are untrue.
I write this tongue-in-cheek post to give my reasons why someone with debt problems (also known as a “debtor“) should not look into bankruptcy as an option to resolve their debts.
Reason #1: You Prefer To Not Know All Your Options
This one is pretty basic. Why get all the facts before deciding on something? Just like going to a doctor for back pain. One doctor tells you you need surgery. Why would you want to learn about potentially superior and less invasive alternatives such as physical therapy, prolotherapy, etc?
The real answer is simple: You cannot make an intelligent decision about anything without knowing the costs and benefits of all available alternatives.
If you close your eyes and ears to your options, you shut out possibilities.
When you are in dire financial straits, this is the time to fully examine your options, including bankruptcy, and determine what works best for you.
Reason #2: You Prefer to Pay More Than You Can Afford
Did you know that in bankruptcy you often will pay far less (and often nothing) on your debts than you would if you try to do alternative resolution such as debt consolidation or negotiations?
Well, it’s true. It depends of course on your budget and value of your assets and other considerations, but it is important to have a comprehensive consultation with a bankruptcy attorney to determine how it would affect and/or assist you.
Reason #3: You Don’t Care About Tax Consequences
Did you know that if you do debt consolidation or negotiate with your creditors and they agree to accept less than 100% of what is owed, that the amount forgiven can become taxable income to you and that income can result in significant tax liability for you?
However, by federal law, debts discharged (forgiven) in bankruptcy do not result in taxable income to the debtor. Nifty, huh?
Reason #4: You Have Rich Friends and/or Relatives
Hey, that’s great.
If they are willing to pay off your debts for you, you are a lucky soul.
However, you still might want to explore bankruptcy as an option even if you decide not to use it.
Reason #5: You Enjoy Anxiety
What causes anxiety? Generally it is fear of the unknown.
Nothing defeats anxiety like knowledge and taking charge of your actions.
Yes, Xanax and other drugs work nicely too, but they are short term solutions.
Learn about all your alternatives, including bankruptcy, and then decide what works best for you.
Bankruptcy: To Sum Up
There are lots of myths about bankruptcy but like most myths, if you take the time to learn the truth, you may find the myths to be false.
Most bankruptcy attorneys offer free initial consultations to go over your situation. I encourage anyone with debt problems to take advantage of that to learn what may very well end up being your best option for a fresh start and debt relief.
Image courtesy of: sonofgroucho