Law Office of Allan E. Dunaway, PLC

Why waiting to file for bankruptcy can be a mistake

Debtors in Kentucky and throughout the country may be doing themselves a disservice by waiting to file for bankruptcy. By waiting, they could deplete assets or otherwise negate some or all of the financial benefit gained by filing. In many cases, individuals who choose to file only do so when they are at the point when they face debt collection calls or creditor lawsuits. The time that people spend putting off asking for protection from creditors is called the sweatbox.

According to a survey from Notre Dame Law Review, 66 percent of cases analyzed involved those deemed to be long strugglers. This means that a person spent two years or longer in the sweatbox. Furthermore, roughly 33 percent took five years before seeking bankruptcy protection. Those who chose to wait before filing for bankruptcy generally had higher debt-to-income ratios than others with debt.

Furthermore, they were more likely than other people with debt to face collection lawsuits. In many cases, people decide against bankruptcy because there is a stigma about making use of that tool. Those who are struggling with their debt are urged to speak with a credit counselor about ways to ease their burden. Bankruptcy may be appropriate for those who have a debt-to-income ratio of higher than 40 percent.

Filing for Chapter 13 bankruptcy may have many benefits for a debtor. For instance, it may be possible to retain ownership of a house or negotiate new home loan terms. Unsecured debts may be paid off in part or in full during the three- or five-year repayment period. If a balance remains on an unsecured debt when the payment period ends, that debt may be discharged. Debtors could also receive a stay against creditor contact or collection activities such as a lawsuit.

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For sound bankruptcy advice you can count on, from a skilled lawyer who truly cares about your future, contact the Louisville Law Office of Allan E. Dunaway, PLC. We have two convenient locations: Louisville, Kentucky, and Jeffersonville, Indiana. Our main office in Louisville is located off the beaten path so you won't have to deal with downtown traffic and can pull right up to our door and walk right in.

Call us at 502-785-1005, or send an email message. Our law firm welcomes the opportunity to serve you in any way we can.

If for some reason personal bankruptcy is not for you, if you do not qualify for the Chapter 7 approach via the "means test" and Chapter 13 reorganization is not the answer, Allan E. Dunaway works hard to inform you of other appropriate means of debt settlement that suits your unique needs.

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