When you don’t have enough money to pay creditors, it’s difficult to imagine being able to pay an attorney to make those same creditors go away. I encourage clients who are stressed by financial problems to focus on the long-term. And if bankruptcy is going to provide a long-term solution for helping you regain a peaceful and financially stable life, here are a few way to pay for it:
This isn’t an option for everyone. Some clients have borrowed from friends and family over the years just to keep their heads above water. Going back to them for ‘one last favor’ may not feel good. However, this is different. If you’re considering asking a friend or family member for a loan to file bankruptcy, you can insure them of your ability to re-pay it because all of your other monthly debt will be gone. And, the bankruptcy court allows you to re-pay this loan, after your bankruptcy is complete.
Stop Paying Creditors
Once you’ve spoken with a bankruptcy attorney, you can determine which monthly debts will go away with bankruptcy. Take the money you’ve been sending those creditors each month and start putting it toward the bankruptcy fee. It may take a few months, but once you’ve decided to file, you don’t need to worry any longer about the consequences of not paying credit card companies and medical providers.
Stop Paying Your Mortgage
In many cases, clients who are turning over their homes in bankruptcy are able to stay in the home for months without paying the mortgage before leaving the home. This aids tremendously in getting back on your feet financially. In fact, when you file bankruptcy all foreclosure proceedings are ‘frozen’ by the Automatic Stay in bankruptcy. This means your living situation is not disrupted or threatened until your bankruptcy case is dismissed or you receive a discharge.
Use Your Tax Return
If you have been using your tax return to catch up on bills, consider filing bankruptcy instead. The strategy isn’t working for you, but bankruptcy will. When next year’s tax return comes you can invest it, spend it on home repairs, or treat yourself in some way—but you won’t be paying creditors with it.
Use Retirement Funds
I hesitate to recommend that clients use retirement funds to pay for bankruptcy, because those funds are typically protected from creditors. However, if we decide that the short-term expense of using 401k funds or other protected funds to pay for the bankruptcy is outweighed by the positives, then it’s a consideration and it’s allowable.
Can I Use Credit Cards To Pay?
No. The bankruptcy court does not allow you to use credit cards to pay for your bankruptcy. All cash advances and major purchases during the time leading up to bankruptcy are heavily scrutinized by the court, and the creditor can claim you abused the line of credit if you use it to pay a bankruptcy attorney. An attorney can help you strategize around the use of your credit cards prior to bankruptcy though, so make that part of your conversation when you call for advice.
Talk To An Attorney
The most important thing you can do is find out what your options are. Call me today for a complimentary and stress-free conversation about your options in bankruptcy. You’ll know more, and you’ll feel better. 704.749.7747.