OT: Is Anyone able to Offer Advice on Filing Bankruptcy?, Seriously thinking about IT again Options

[Scott Carlberg]

I'm looking for Suggestions, Advice, What to Do's and What NOT to do's.

thanks.

[914-8]

Here's the thing. Bky make sense for some people and in some situations. But the biggest problem that I see is people jumping into it without really understanding it, or without any real plan. Then people file, pay a lot of money into the bky system, and not end up where they thought they would.

For example (and this is just an example), not all debt is dischargeable in a bky. Under the new bky laws, this can include some credit card debt. That would be a bad situation, where someone with $75K in credit card debt files bankruptcy, only to find in the end that the debt is not discharged in the bky. That means the debt stays with them, even after the bky.

Or someone with some assets files a Chapter 7 bankruptcy, and because of the assets, a Chapter 7 trustee is appointed. The Trustee has all sorts of powers, and can be very invasive into your finances (personal, or corporate, if it is a company filing bky). The trustee can subpoena banks, people, etc. to obtain records going back many years.

Part of the problem with our legal system is that everything costs money, and a lot of money. At least for quality representation. Ironically, even "going broke" in the most effective manner costs money. If you have $1 million in assets and $20 million in liabilities, you can hire a good bky lawyer (at $350-$500 per hour) and likely work out the situation. If you have $5,000 in assets and $75,000 in liabilities, you will not have that advantage.

Generally, it really is best to try to work things out with your creditors. See if they will accept a reduced payoff amount, payoff over time, etc., as part of a plan to avoid bankruptcy. You could try to do this yourself, or through a bky lawyer, or probably some kind of credit counseling firm. I think there are credit counseling programs that help you work through these things, and they are probably worth looking into. (I think some of that is required before you can file an individual bky under the revised laws).

I'd be sure to give that as much effort as possible. If you have to file a bky, make sure you find a very good bky lawyer, not one of the "bky mills" that does nothing but file individual Chapter 7 bkys all day. They make their money by volume, and are not interested in helping you avoid bky. Also, do your own research and try to learn as much about the process as possible. There is a lot of available info out there.