Have you heard of the “financial sweatbox?”
It’s the term for the period between getting into major financial trouble and choosing to file bankruptcy. Often, people try everything they can think of to avoid filing for as long as they can, thanks primarily to the stigma of filing at all.
The American Bankruptcy Institute describes it this way:
Time in the sweatbox consists of time when a consumer defaults on a debt or is about to default on a debt. It is during this time that lenders make debt collection calls, charge high interest rates and fees, and consumers often choose to live without the necessities of food, utilities, and medical care in order to meet obligations. It is also during this time that consumers often liquidate or lose what little assets they own. Homes are lost to foreclosure, vehicles are lost to repossession, retirement accounts are cashed out to pay debts, and consumers will often sell personal property items such as jewelry, firearms, furniture, electronics, tools, etc. to pay bills.”
The sweatbox period is destructive. For example, if you raid your retirement account to pay off some old collection debt your credit score barely rises. A huge company enriches itself at the cost of your long term wellbeing. The longer you stay in the sweatbox, the worse your long-term financial outlook is likely to be.
The truth is, once you get into enough financial trouble to need bankruptcy it’s usually smarter to file as fast as is feasible.
Signs that you need to file include:
- Being behind on your mortgage or rent payments.
- Using credit cards to pay for necessities.
- Getting multiple collection calls.
- You’re being threatened with lawsuits.
- You’re being threatened with vehicle repossession.
It’s better not to wait until repossessions or evictions take place as bankruptcy can stop both. You may also want to consider bankruptcy if you have no savings.
Watch your interest rates, too. Credit card companies often spot trouble before you do, and raise your interest rates accordingly.
It’s never too late to file bankruptcy, though there are certain elements of timing that you should be aware of. For example, if you’ve filed bankruptcy in the past then you may need to wait before filing again. If you’ve made a major purchase recently, or have sold a home or a car, then your attorney may advise you to wait, since these actions can create exceptions to your bankruptcy discharge.
In most cases, your life will improve after your bankruptcy filing. The automatic stay will protect you from lawsuits, garnishment, eviction, and repossession. All the collection calls will stop.
In many cases we can protect the very assets the creditors would like you to raid to pay them.
There’s no risk in calling Simon Haysom if you’re not sure whether the time is right. We’ll offer a free consultation and will look at your unique situation and finances. This can help determine whether bankruptcy is right for you at this time, or whether another strategy would be better.
This is a no-obligation consultation, which means if you decide bankruptcy isn’t right for you then you’ve lost nothing at all.
Contact us today to get started.
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