Written by: James McGuire, Bankruptcy Attorney

If you are facing financial difficulty, either personally or in your business, it is wise to speak with an experienced bankruptcy attorney sooner rather than later to see if bankruptcy is a good fit for your situation.  Let’s face it, no one wants to file bankruptcy.  That doesn’t change the fact that filing a bankruptcy for many people is inevitable.  We can only hold on so long after a major illness, loss of job, or other financial crisis.

Unfortunately, we often meet with individuals and businesses that we could have done much more for if they had come to us earlier in the process.  Bankruptcy is intended to give the “honest unfortunate debtor” a fresh start.  If you are going to file bankruptcy, it makes sense that you should obtain the best “fresh start” available under the law.  Usually, this takes time and planning.  A few examples illustrate the point.

The saddest news we typically deliver to clients in bankruptcy consultations is the fact that they should not have drained their retirement accounts to pay unsecured debt in an effort to “stay afloat.”  Most people are unaware that most government qualified retirement accounts are entirely exempt from their creditors.  This means that you can file bankruptcy and keep the money that is in your retirement account.  Nothing is worse than telling a client who has liquidated $100,000 in 401(K) accounts to try to stay afloat, that if they had come and seen us a year earlier, we could have filed bankruptcy and they could have kept that money.

Sometimes a person might need to purchase a car before filing bankruptcy to maximize their fresh start.  In chapter 13 cases, it is sometimes wise to purchase adequate insurance for your family that you may have gone without because of financial difficulty.  This is an allowable expense and will reduce what you would otherwise pay back to your creditors.  IRA and 529 plan contributions are also sometimes appropriate prior to the filing of a bankruptcy case, but must be done sufficiently in advance.

If you come to a bankruptcy attorney 5 days before a foreclosure sale on your house and ask us to file a bankruptcy to save your house, we can do that (provided you otherwise qualify for bankruptcy).  However, there is very little that can be done to maximize your fresh start in those circumstances.  Often, emergency filings such as that come with consequences that can not be avoided.

The bottom line is, we offer confidential consultations for consumer bankruptcy matters and modest consultation fees for business bankruptcy filings.  If you are even contemplating bankruptcy, or even if you had not yet considered it but are struggling financially, you should make an appointment and evaluate all of your options.  If bankruptcy is not right for you, we will tell you that.  There are sometimes options you may not have considered. Please call us today!