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Bankruptcy and common sense

All too often, we rely on our emo­tions to guide our decisions, even when we know emotions do not make a very good advisor.

I sit across from a client I last saw three years ago when he asked me how to best pay off a $12,000 credit card debt. Within 15 minutes it became clear that his best and most realistic option was to declare bankruptcy. Knowing how difficult it is for some to hear the term “bankruptcy,” I provided my opinion by first walking through other options like settlement and consolidation (more de­tail on these can be found in my article “Want vs Can”). I demonstrated how in his case both of these options lose out to bankruptcy in terms time and financ­es, but he decided it wasn’t for him. Now – three years later – I sit across from him once again; his credit card debt still at $12,000, not to mention the money spent trying to fix the problem since we last met.

Let’s touch on the numbers. In the above case, settlement and consoli­dation would each cost approximately $5,000 plus a certain impact on your taxes – in the beginning of the year, you would receive a 1099 for $7,000. The entire procedure would take at least a year, and during that time you would have to negotiate with your creditors, which is emotionally draining and has no guaranteed results.

In comparison, a bankruptcy would typi­cally take approximately 3-4 months, cost $1,500 or so, and would not require your presence. So what gets in the way for most people? From my experience, it is the usually irrational fears of consequenc­es. Some individuals are afraid they will be found out – that others would know they went bankrupt. This is not true, since disclosures cannot happen without your approval and knowledge.

Then, there’s the dreaded 7 years – referring to how long it would take for a bankruptcy to be removed from your credit history. Ironically, while this is true, it does not actually stop you from improving your credit history or from much else. In fact, you can qualify for a mortgage within 24 months of getting a bankruptcy. You would likely not want a mortgage before then anyway, as you would likely focus on accumulating your down payment and restoring your credit. And it is possible to get your credit score to 720 within 6 months of a bankruptcy, and to get your first credit card with a $10,000 limit within 8-10 months!

80% of bankruptcies are declared for sums under $20,000, and in 90% of cases it took individuals five years or more to decide to file. I respect the dedication, but hope you will not be in that group. Consider acting much, much sooner! I am here to help and to advise.

joseph RozenbergPlease call me for more information: 847-520-7030.
email: mockbajr@gmail.com
site: www.drfgroup.net

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