One of the main characteristics of quicksand is that once you’re in it, the more you move and try to get out, the deeper you sink.
Many who are having financial difficulties that lead to seeking bankruptcy advice feel like they are stuck in quicksand and everything they do causes them to sink a little, or sometimes a lot, further.
I could bore you with all the mathematical reasons why this occurs, such as interest accrual, penalties, bad income-to-debt ratio etc., but the bottom line is that people simply wait too long to recognize and act on their problems.
Falling Further Behind On Your Bills
It is many times every week that I counsel someone who has substantial credit card debt who has been paying on it for a long period of time, and just can’t seem to make any progress towards reducing the balance. This is very typical, especially when those same people are trying to maintain (or catch up on) their mortgage payments, paying for their childrens’ needs, vehicle repairs, medical care, and unexpected expenses that always seem to pop up.
You can do the math yourself by using any online calculator, but just to give an example: If you have $50,000 in total credit card-type debt, at 18% interest (which is actually lower than most after default), if you paid $1,000 per month towards that debt, it would take almost 8 years to pay it off, and that assumes you do not purchase any more items on credit during that time.
How many of you have an extra $1,000 per month to make payments on your credit cards? Not too many I would guess. And most of my clients come into my office with far more than $50,000 in credit card/unsecured debt.
So this should be a bit of a guidepost for you. In order to make a meaningful dent in your debts, you have to have a LOT of surplus income (called disposable income in bankruptcy parlance) and small enough total debt to pay it off in a reasonable amount of time.
Otherwise, you’re going to find yourself stuck in quicksand.
Bankruptcy Can Pull You Out of Debt
Bankruptcy is a rope you can use to pull yourself out. It does not create disposable income for you, but it can get rid of the debts and allow you a fresh start. Don’t wait until you have been pulled all the way under–explore your bankruptcy options sooner rather than later. Doing it sooner allows you to possibly avoid spending thousands of dollars unnecessarily, and also enables you to better plan or utilize other strategies that may benefit you as well in addition to, or instead of bankruptcy.
Find a qualified bankruptcy attorney in your area for a consultation.
Image Courtesy of: Electricnerve
This was the letter “Q” in my Bankruptcy Alphabet series.