In the wake of COVID-19, individuals, families, and businesses across the United States are struggling to make ends meet. After mass layoffs, forced closures of stores and restaurants, stay-at-home orders, and, of course, staggering medical expenses, millions of people are leaning on state and federal assistance simply to pay the bills and avoid losing their homes.
Instead of waiting until financial aid runs out, you may benefit from a different strategy: bankruptcy. If you have accrued mountainous levels of debt, you could already be considering it—but you might have heard that it’s best to treat bankruptcy as a last resort.
Let’s take a look at 6 reasons why it’s usually better to file sooner rather than later.
1. Federal assistance programs are set to expire by December 31st
Millions of workers are currently receiving unemployment benefits from programs that will terminate by the end of this year. Additionally, many people have stayed safe from eviction solely because of a nationwide eviction moratorium that is set to expire on December 31st, as well. College graduates with federal student loan debt will also need to begin making payments again in February of 2021.
Congress has been stuck in gridlock for months, and no one can be sure of whether the government will pass another stimulus package. Waiting until the aid and protections run out will only delay the relief you can experience by filing bankruptcy.
2. You may lose your home or vehicle if you wait to file
If you’ve fallen behind on secured debts such as automobile loans or a mortgage, your lender may decide to repossess your vehicle or initiate foreclosure. While bankruptcy may be able to interrupt these proceedings, you will have a much greater likelihood of keeping your home and vehicle if you file proactively.
3. A creditor or debt collector may place a lien on your property
A lien is a legal claim that a creditor or debt collector has to your property or to a certain level of equity. The lienholder will be entitled to the value of the lien when you sell the property, and they may even be able to force the sale so they can collect the amount to which they are entitled.
Unsecured creditors (like credit card companies or private debt collectors) can place liens on your property if they sue you and obtain a judgment against you. If you owe taxes, the IRS can place a lien on your property without going through the court system.
While bankruptcy may be able to discharge debt, you may have a harder time removing liens. As a result, the lienholder may still be able to seize your property or force a sale and collect the value of the lien. Bankruptcy will be much easier if you don’t need to worry about removing liens from your house or vehicle.
4. Bankruptcy could discharge debts you are currently trying to pay off
Are you doing everything you can to pay off credit card debt, medical bills, and other forms of debt? This may help you keep creditors and debt collectors at bay, but you might be throwing away money that could otherwise go toward savings, retirement, college tuition, and more.
This is because bankruptcy is capable of wiping out substantial amounts of debt. Most commonly, bankruptcy eliminates credit card debt, medical bills, unpaid utility bills, payday loans, and other forms of unsecured debt.
5. Delaying bankruptcy could force you to deplete your savings and sell your property
To satisfy creditors and debt collectors, you may be tempted to use up all your savings, pull from your 401k and other retirement accounts, and even sell your assets and personal possessions. In most cases, however, bankruptcy laws allow filers to obtain a debt discharge without losing anything they own.
6. Simply put, bankruptcy is much better than you think
Because of the negative stereotypes and misinformation surrounding bankruptcy, people often do whatever they possibly can to avoid bankruptcy.
But bankruptcy helps hundreds of thousands of people each year achieve freedom from unmanageable debt. You may be surprised to learn how bankruptcy may significantly improve your situation, and waiting to fully assess this form of debt-relief will only intensify the financial adversity you are experiencing today.
Discuss Your Options with Our Dedicated Attorney
Even if now is not the right time for you to file bankruptcy, there is no harm in discussing it with our attorney at Robert H. Solomon, PC. We offer free initial consultations, which will allow you to ask any questions you have and let us address each of your concerns. We work every day to dispel the harmful myths surrounding bankruptcy because we want as many people as possible to experience the invaluable relief it can provide.