Over the last 20 years I have helped hundreds of clients put financial difficulties behind them in Garden City KS and the surrounding areas using bankruptcy laws. Over all this time most of my clients struggle with the same questions and concerns during my free bankruptcy consultation. Some of these include…
- What it will do to my credit? (Although it is already likely ruined)
- What will people say? I was taught to pay my bills and just can’t treat the bank/credit card company/doctor/etc that way.
- Can I work through this? If I just get a raise/job/get over my sickness/win the lottery I am sure I can get through this.
- If that stupid bank would just give me a loan I could get out of my financial problem.
- And the hardest one… What will my mom think?
I’ve heard these and many more worries from hard-working folks struggling with the idea of filing for bankruptcy. In fact, many people put off filing a bankruptcy for years with these kinds of justifications.
Basically, each of the above worries is an emotional response to financial difficulties. Recently I had a couple come into my office seeking advice with these types of concerns wondering whether they were a candidate for bankruptcy. To start, I asked how much they owed to banks, credit cards and medical bills. The total was about $40,000. Then I asked if they had $40,000? Of course, the answer was no. I then asked what kind of a payment they could make on the debt. It was pretty small and with lots of sacrifices. They would have to slash their food budget, stop maintaining their vehicle and other hardships to pay around $250 towards the debt. I then did some quick math. Here it is…
When you take $40,000 times 18% interest (a very low interest estimate in today’s market) it adds up to $7,200 a year or about $600 a month – just in interest! This means if they paid $600 a month on their debt forever, it would never get smaller. The two years they had paid $200 a month on this debt only resulted in the amount they owed increasing by $400 a month. When I showed them that they needed to pay $600 a month just to stay even, it became clear to them that they were bankrupt and they were never going to get out of debt.
Bankruptcy, although it feels like an emotional disaster, is actually a math problem. If you are unable to reduce your debt on a regular basis, you are bankrupt. It’s as black and white as that. If you let your emotions continue to drive your decision rather than take a real world look at the math, you will continue to struggle and never make the decision to get a fresh start using the bankruptcy laws that were created just for this purpose.
If you are not making any financial progress, struggling with bills, fighting with creditors and worse, trying to live with the depression, stress and potential health issues that result from financial problems, let’s have a conversation about it. Let me help you digest the problem and actually look for solutions. Bankruptcy is not always the answer, but putting off creditors and getting further and further behind on bills is never the answer.
Dean Ryan is an experienced Garden City Bankruptcy Lawyer
for Southwestern KS. For a free bankruptcy consultation
call 620-275-9614 during normal business hours.