If there’s one thing that has become apparent to me in my 20 years of handling Bankruptcy cases, it’s that many people wait too long before making the final decision to file.  The flip side to this is that most of those people would agree that they should have filed sooner.  Let’s examine a few typical situations and what I mean by “waiting too long.”

The vast majority of my Clients have tried everything possible to stay on top of their bills.  From cashing out accounts of all kinds, to refinancing their homes, I have yet to meet the person who fell a little behind and then suddenly thought to bail out of their debt by filing Bankruptcy.  Often, they have spent hours and hours on the phone trying to work things out.  Whatever anyone’s particular story, there is almost always a general pattern of attempt after attempt to get on top of the bills.

Sometimes, the realization that Bankruptcy is the way out comes as a kind of last resort, desperate measure.  Being served with a Lawsuit, or having a Writ of Garnishment attach to their paycheck rightfully scares most people into action.  Other times, while there is no impending sense of desperation, a person comes to realize that they have gone through all the money and resources available to them, and is as far behind as ever.

To me, that’s having waited too long. 

And here’s another irony of my business.  Those that call my office having “tried everything” are far more interested in when they can get in and begin the process.  They don’t have any huge pre-considerations about filing for Bankruptcy; they just want to get it done.  Those people make the easiest Clients.

Those people who have not gone through all their money or resources, but who still face a mountain of bills, have lots of questions, and often want to “consider” all kinds of things.  I call this stage, where someone thinks a lot, but actually does very little, the “Paralysis of Analysis.”  In other words, instead of just forging ahead and filing Bankruptcy, a person keeps trying to out-think the Bill Monster, and stay a step or or two ahead.

It doesn’t work.

That’s the sad part.  Retirement accounts will be cleaned out.  More money will be borrowed.  Wages will be garnished.  Sleep will be lost.  And in the end, they file the same Bankruptcy a year, or two, or however many more later, that they are filing now.  The difference is that they have lost or spent assets or money that they would have otherwise been able to keep and protect through the Bankruptcy process.  The have lost sleep, and wasted countless days and nights worrying about the bills that could have just as easily been eliminated years ago.

Getting out of debt is great.  But rebuilding your Credit is also just as, if not more important than dumping the bills.  And it’s this aspect of Bankruptcy which presents itself as the greatest unknown and biggest target for every bill paying service (a nice way of saying “Debt Consolidation” or “Debt Reduction”) advertising on the Radio and TV.

The plain truth is that is takes VERY LITTLE EFFORT to rebuild your credit to a decent level within 1 year of the time your Bankruptcy case concludes. 

Those who delay, and wait, and try everything else before they file (and mind you, everyone winds up filing) also put off starting that 1 year “recovery” period in which a person rebuilds their Credit to at least a level of “decent.”

While I’m on the subject of those huckster companies that peddle “Debt Consolidation” or “Debt Reduction,” let me ask the reader this:  Have you EVER met anyone, or even HEARD about anyone who had a good experience with that kind of plan?  Absolutely not!  However, even if you don’t personally know someone who told you they filed Bankruptcy, I’ll bet you’ve heard (probably a number of times) about someone who filed Bankruptcy, got out of debt with no hassles, and recovered rather nicely and quickly.

The costs of waiting too long are several.  There is money spent, aggravation endured, assets lost, and, perhaps most importantly, there is the delay in the beginning that 1-year period after Bankruptcy in which a person’s Credit can be pretty well re-established.

If there's one question that I think might aid the reader in deciding whether to file or not, it would go something like this:  What do you think is going to happen in the next 6 months that will get you debt free?  If there is no good answer to that question, then ask this one:  Would you rather be debt free, and have re-established your Credit to a relatively decent level in about a year from now, or still be trying to figure out a plan to do that, while you struggle with the bills?