Being a good lawyer means being able to tell you when not to file bankruptcy. That’s right; Lorain County bankruptcy attorney William Balena is telling you that not everyone in debt should hire him. Take a look at my testimonial page. That was Randy’s experience. He was in debt. Lawsuits had been filed against him in Oberlin Municipal Court. Yet a chapter 7 bankruptcy was not a good idea for him… for now. Just this week a woman came in and we decided that this wasn’t the right step for her either.
Why would I recommend you not file bankruptcy even though that is why you came to see me? Here are the 5 main reasons
- Your home is worth less than you mortgage balance.
- You have a very low income or no income at all.
- You have too few assets
- Your are being sued, but you are “un-collectible”
- You are undergoing or anticipating medical treatments which are not paid by insurance
Many people have too much debt, or you listen to the hype in the media and realize your house isn’t worth as much as you owe. Welcome to America in the 21st century. If you can afford to pay the debt you should. There are alternatives to bankruptcy. As far as the house goes, unless you simply can no longer afford the payments, even if you file bankruptcy you have to live somewhere. That means payments. Is your house an investment? Not for most people. It is where you live. It will always be a drain on your finances whether you have equity or not.
You should have a reason to file bankruptcy. Job loss, divorce, health issues, lawsuits, garnishments, and bank attachments are the most common causes. Just because you are in debt does not mean you need to file bankruptcy. Bankruptcy is meant to protect you or your assets from predatory collections. It will work to prevent the loss of your wages and property to bill collectors. For instance a judgment creditor cannot garnish 30 hours per week at the minimum wage rate in Ohio. If you work part time for minimum wage, bankruptcy protects you from nothing.
If you have too few assets they are exempt, no one can take them. Bankruptcy is a waste of time and money to protect things that are already safe. Having too little income or too few assets for a creditor to liquidate in court to enforce a judgment makes you “un-collectible.” If you are un-collectible the only reason to file bankruptcy is if you want to stop the collection calls and collector harassment.
Bankruptcy is the nuclear option. Don’t use an atom bomb when all you need is a fly swatter. It is something that you can only do once every 8 years. You have no idea how many come to my office for a consultation drowning in medical bills, but they filed bankruptcy a few years back over a few credit cards. Now when they truly need it the only choice is a chapter 13 repayment plan. Not that a chapter 13 is bad, but it would be nice to have a choice. If you have a medical condition and are undergoing treatment, or see surgery in the future, wait, do not file bankruptcy. I’d rather file after all those bills are in.