Some people feel that they are in need of bankruptcy protection, and visit an attorney, only to wait months or even years before deciding to file. In some cases, this may not have consequences beyond those that may be anticipated.
In other cases, the wait can produce tragic results. A number of months without credit card payments can result in disqualifying debt, since Chapter 13 places a cap on how much you may owe. If your income precludes you from filing a Chapter 13, you may miss out on liens on your home that are not eligible to be used in Chapter 7 .
Other Problems May Occur if You Wait too Long
Credit card interest keeps growing, while you’re deciding if a bankruptcy is right for you. Interest may accrue before the card issuers sell your debt to a collection agency. Data from Bankruptcy Law Network points to the fact that a $20,000 initial debt may be $50,000 by the time you file, if you wait years after your first consultation.
Doing nothing may seem harmless, but it is not. You may be inclined to stay with what you are accustomed to – being in debt. It makes more sense to imagine what it will be like when you are debt-free. The costs involved in waiting may be more serious than going over debt caps. The stress of constant indebtedness is not healthy and it can cause depression.
Each month that goes by before you file for bankruptcy costs you money that you could save each month, after your debts are discharged. Ignoring your debts without doing anything can be quite expensive.
Why You Should Not Wait to File
If you would like to file a Chapter 13 bankruptcy in order to stop your lender from foreclosing on your home, don’t wait to file. Law offices may not have time to fit your case in, if you wait until the last minute and need everything filed in a hurry.
Some people do not pursue a Chapter 13 if they are waiting for their mortgage company to work out a loan modification with them, to stop a foreclosure. What happens if they don’t come through with that modification? Once your home is in foreclosure, the chance to keep the loan as it exists is gone.
There is no reason to wait for the last minute to file for a bankruptcy. It will cause you a lot less stress to take care of business before the date for foreclosure comes near.
If your accounts are delinquent, waiting will only worsen your financial status. Your credit will become damaged as your debt deepens and you fall further behind in your payments. Kelly Can Help states that collection efforts will increase, and creditors can use calls and letters to make your life miserable. Different lenders may even put a lien on property. This includes your home, if it is your own.
Avoid Garnishment and Repossession
Another problem with worsening debt is wage garnishment, where lenders will hold money from your paycheck before you even see it. Your credit will continue to become more damaged, and more companies will add negative or derogatory reporting on your credit report.
Vehicle repossession can also happen quite speedily, and you don’t want to be left without your transportation to get to work. This becomes a spiraling problem, since by now your credit score is so low that you may not be able to get another car loan.
The longer you wait to file bankruptcy, the worse your financial struggles will become. If you can somehow afford to pay your way out of debt and catch up on your past due accounts, that is an option, but by this time, most people do not have that option anymore. Speak to a bankruptcy attorney before your situation gets any worse.
For over 25 years Tyler, Bartl & Ramsdell, P.L.C. has helped thousands of individuals and businesses find firmer financial ground. Call today for a free consultation, (703) 549-5000.