Reasons Why Filing for Bankruptcy Sooner Could Benefit You in the Long Run

If you recently lost your job due to the COVID-19 pandemic or have been thinking about filing for bankruptcy given the seeming insurmountability of your consumer debt, it may be better to file for personal bankruptcy sooner rather than later. Indeed, according to a recent article in MarketWatch, you should think “defensively” about your debt, and you should consider filing for bankruptcy on the sooner side. In short, by filing for bankruptcy sooner, you may be able to avoid dipping into assets that are exempt, and you could end up in a better financial place once the pandemic eases. We want to refer to the article and to tell you more about why it could make sense to file for bankruptcy on the earlier side rather than waiting before talking to a bankruptcy lawyer.

Letting Cash Accrue Could Lead to a Seizure by Creditors
If you have begun making only the minimum payment on your credit cards in order to make sure that you have at least some cash on hand to pay for essentials during the pandemic, you should know that letting any sort of cash “pile up,” as the article explains, could open that cash up to creditors for seizure depending on your particular financial situation. If a creditor files a lawsuit against you or attempts to garnish your bank account or paycheck for money you owe, any cash you have placed in reserve ultimately could go to that creditor.

If instead you file for consumer bankruptcy, the automatic stay that accompanies any Chapter 7 or Chapter 13 bankruptcy filing will prevent any creditor from taking further action to collect on your debt—including initiating a lawsuit or garnishing wages or a bank account.

Do Not Sell Property That Could be Exempt
If you are ultimately going to end up filing for consumer bankruptcy, it could be a mistake to sell off property you own in order to pay your debts now. As the MarketWatch article underscores, you could be thinking that it makes sense to sell certain property in order to pay your existing debts, yet if you are ultimately going to file for Chapter 7 bankruptcy and those assets are exempt, it may not be necessary to sell them.

Avoid Drawing From Your Retirement Accounts
For most consumers, retirement accounts will be exempt in a bankruptcy case. As such, drawing from your retirement accounts now could end up costing you much more in the long run. If you are considering bankruptcy and you are thinking about taking money out of your 401(k) account or another type of retirement account to pay down those debts in the short term, you should speak with a bankruptcy lawyer about your options.

Contact an Experienced Bankruptcy Lawyer in Oak Park
If you have questions about filing for consumer bankruptcy, or if you need assistance with your personal bankruptcy filing, an experienced Oak Park bankruptcy attorney at our firm can assist you. We know how difficult these times are for so many individuals and families in the Chicago area, and we are ready to help you with a variety of bankruptcy and consumer protection issues. Contact the Emerson Law Firm for more information about the services we provide to consumers in Oak Park and throughout Chicagoland.

See Related Blog Posts:
Could Consumer Bankruptcy be an Issue for Congress?
What is the Difference Between Discharged Debt and Canceled Debt?


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