One year ago, the words “Covid-19” began to trickle into the nightly news. No one could have foreseen that “Covid-19” would quickly become synonymous with “global pandemic” or that it would devastate so many ordinary Americans. Our health, safety and welfare has been turned upside down. The impact cannot be minimized as Covid-19 has touched everyone physically, emotionally and financially.
Waiting to File Bankruptcy Can Cause More Financial Risk
With thousands of businesses, large and small, closing, and the words “lay-off” and “furlough” becoming all too familiar, you may find yourself wondering if bankruptcy is something you should consider. And if so, should it be now or later? As it goes with life, timing is everything! What does this have to do with filing bankruptcy? Sometimes waiting to file makes sense, but waiting too long puts you at greater financial risk.
Waiting too long to file bankruptcy can expose you to unnecessary, often harassing creditor contact. Creditors have a lot of tools in their “collection toolbox.” They can garnish your wages, levy on your bank account and seize your assets. These creditor tactics are not just financially disruptive – they can be devastating to your ability to pay your other bills, leading to more unpaid debt, and a faster descent into financial chaos and, oftentimes, emotional despair.
Filing Bankruptcy Can Save You Stress and Money
Filing bankruptcy can offer both financial and emotional relief. Once you file, creditor contact breaks the law. When you make the decision to file bankruptcy you shift the balance of power from worrying and waiting to being secure in the knowledge that creditors are not allowed to contact you or attempt to take your money without warning.
Filing bankruptcy can even save you money! Many assets are protected when you file bankruptcy – like your 401k that you get through your employer, your social security benefits, and even some or all of the money in your bank account. But if you wait too long you may unknowingly deplete assets that you would have been able to keep.
Waiting to file bankruptcy can also be very emotionally draining. No one wants to be surprised when a creditor decides to use the tools from its collection toolbox. There is a term for the time before a person files for bankruptcy – it’s known as the financial “sweatbox.” This period goes beyond struggling with asset depletion and debt collection lawsuits; people stuck in the sweatbox are dangerously waiting and forgoing basic necessities, like food, to avoid filing bankruptcy.
Long Struggles with Collections May Reduce Your Assets
A study from the Consumer Bankruptcy Project (CBP) found that 66% of those waiting to file bankruptcy were “long strugglers” or those who have endured the sweatbox for 2 years or longer. By the time they filed for bankruptcy, long strugglers typically had half the assets vs. filers who did not wait for two years. Another alarming takeaway from the CBP study was that approximately 50% of long strugglers face collection lawsuits compared with 35% of those who did not wait to file bankruptcy.
The bottom line is that there is no need to struggle with insurmountable debt, overzealous creditors, and debt-related emotional turmoil. There is no need to deplete all of your assets and give up basic human needs in an attempt to keep your head above water. For the majority of people with this level of financial distress, bankruptcy is a tool that offers relief from their financial and emotional burden, and the time to act is now, not later.
Get out of the sweatbox – speak to a lawyer about your bankruptcy options today.