Recently I filed bankruptcy for a very close friend of mine.  It was quite a learning experience for me.  Even though I have been a practicing bankruptcy lawyer since 1981, I forget what people go through when they have financial problems.  I was desensitized.  But going through the process with her reminded me of the pain and suffering it is for most of my clients, the agony of the decision to file, the humility at not being able to pay your bills, and having collectors calling when you always were able to pay your bills in the past.  She reminded me of the sleepness nights, worrying, ruminating over and over again, was there a way out of the financial mess.  Going over things in her head, over and over again, trying to figure out a way through the problems.  A way to work it out without having to come to me and say, I need to file bankruptcy.  She told me how she felt.  She had been one of the most successful of all my friends from the old days.  We used to tease her, about how much money she had, and how much she wasted.  Well, the recession had caught up with her and her income had dropped almost in half.  She could not keep up with all the credit card payments.  She used to be able to pay them off every month, or at least 10 times the minimum payment, but now, she couldn’t pay the minimums.  She felt like a failure she told me.  She felt stupid she told me.  She wanted to pay her bills.  She had been using the credit cards to support her dying business.  She had used the cash advances to keep her employees paid.  Now, there was no money left.  She had spent her savings.  The credit card limits were reached.  She couldn’t even rob Peter to pay Paul anymore.  And she felt terrible.  She tried working out payment plans with the creditors, but instead of helping her pay them, they increased the interest rate they were charging her, making it even more impossible to keep up with the minimum payments.

For the life of me, I don’t understand why they do that.  They can see your history of paying your bills, why raise the interest rate when you are having trouble making payments?  These credit card companies push people into bankruptcy, I swear it.  If they would work more with people, there would be many less cases filed.  Now she couldn’t sleep at night, tossing and turning, worrying.  She had no money.  Her income was down and the credit card companies were calling her night and day.  She told them the truth.  She explained the situation.  She didn’t hide.  But they were unwilling to wait for payments.  Finally, those phone calls from the creditors, the hounding they did, forced her to admit she had no other choice but to file a bankruptcy.  It took her a year to finally admit she needed the bankruptcy, that there was no alternative and so we finally filed the case.  She has received her Discharge and tells me the pain is forgotten and she feels relief.   She is glad she filed.  Sorry that it had to be done, but relieved.  Should you file for bankruptcy?  Well, only you can decide that question.

Perhaps with the help of an attorney or other counselor, you can help make your decision.  What factors should you think about?  Here are some ideas to get you thinking………How much debt are you in?  Can you realistically pay it off over a reasonable amount of time?  What type of debt is it?  What is your current income?  Future prospects?  Are you using credit cards to pay off other credit cards?  Are you going to payday loans to make it through till next payday?  Are you living paycheck to paycheck?  Are you able to save anything?  How is your current credit history?  Bankruptcy will be a negative on your credit record, is it worth affecting your credit record to get rid of that much debt?  That is relative…..What are your other options?  What are your priorities?  Are you current on the house payment?  The car payment?  The first step is to stop using all credit cards immediately.  You might want to contact a credit counseling agency website, for tips on budgeting.  I recommend www.moneymanagement.org.Stop borrowing money.  Can you survive without borrowing?  Do you have health insurance?  That is more important than paying off a credit card it seems to me.

The important thing to realize is that there are many resources for people.  Online and over the telephone.  You are not facing these financial problems alone.  It is not worth getting sick over.  It is only money.  It does not mean you are a failure.  Bad things do happen to good people.  You are more than your present financial circumstances.  This too shall pass.  And remember, there is life after bankruptcy.