Bankruptcy Attorneys

One day, someone should prepare a compilation of the “greatest hits” from our Fool Community of discussion boards. There are a heck of a lot of terrific posts out there, full of great advice, interesting thoughts, and charming personalities. Here’s one classic post that was recommended by more than 200 readers and that received more than 40 responses.

CPAScott wrote the post. He offered eight detailed reasons why you shouldn’t file for bankruptcy. I’ll recap them below, but click in to our boards to read the whole post (which includes more info and a section on resources) and its responses.

CPAScott said, and I’m editing this for length a bit:

Even if there really is no hope, bankruptcy is a last choice — always. In an effort to demonstrate to those of you who may be considering a bankruptcy filing, I’ve compiled a list of reasons why you don’t want to. Yes, the list is meant to scare you a little, but worry not — once you understand why, unless absolutely necessary, you shouldn’t file for bankruptcy, I’ll then offer a number of ways you might be able to improve your situation without the aid of the courts. Whether you can see it or not, there IS a light at the end of the tunnel — and yes, you can get there!
Bankruptcy will ruin your credit for a minimum of 10 years. Filing for bankruptcy will release you from many of your debt obligations such as credit cards. Your inability to pay is reflected on your credit report and will remain there for a minimum of seven years. A bankruptcy filing is also one of the most damaging elements to your FICO score (the numerical assessment of your creditworthiness). With such a mark on your report, you will have extreme difficulty securing credit of any kind (including credit cards, automobile loans, and mortgages), and, even if you do, the interest rates will be exorbitant (think 24%). Even once the bankruptcy has cleared from your credit report, it may take much longer to repair your FICO score. Further, many credit applications ask whether you have filed for bankruptcy — not just in the last seven to 10 years, but EVER.

You will lose some of your possessions. … [potentially including] cash; bank accounts; stocks, bonds, and other investments; a second car or truck; your primary car or truck if over a certain value; second or vacation homes; stamp, coin, and other collections; and family heirlooms. …

You will lose your credit cards. … If your car breaks down, or some other unforeseen event occurs, you might find it difficult — or impossible — to be able to produce the cash necessary to deal with it … spare cash will be sparse.

You cannot file for bankruptcy again for [several] years. But, hey, why would you need to, right? Imagine this scenario: You file for bankruptcy to help ease your financial burdens. Three months later you are involved in a traffic accident that is deemed to be your fault. The driver of the other vehicle is seriously injured. He sues you for millions of dollars, and a judgment is entered against you. You have given up your only method of protection.

Not all obligations are discharged in bankruptcy. Student loans, income taxes less than three years due, and back alimony or child support are the most significant items that are non-dischargeable. [He listed some other non-discharged obligations as well.]

This entry was posted on Monday, February 25th, 2008 at 6:08 am and is filed under Bankruptcy, Bankruptcy Attorney. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.