It seems counter-intuitive that bankruptcy can be a tool for financial recovery, but it’s true. Just the other day I met with a client who, like so many others, had fallen victim to the economy: he had lost his job and his home had severely depreciated in value. As a result, his house payment was delinquent and he was unable to make any payments on his credit cards; he was even using them to pay his day-to-day expenses. He was being faced with the possibility of foreclosure and the resulting deficiency judgment from a house that was upside-down by $150,000. His credit card companies had raised his interest rates to a whopping 27%, making repayment impossible.

Before he lost his job he was current on everything. He was a responsible borrower who had the intention of paying his debts. However, due to circumstances beyond his control he was facing a life of impossible repayment and answering to ever-looming creditors.

For him, filing for bankruptcy was a good option. Obviously, it’s nobody’s first choice. However, put yourself in his shoes. His options were 1) do nothing, 2) hope to get another job, only to be faced with the nearly insurmountable task of paying off $12,000 in back mortgage arrearages and his now minimum monthly credit card payments of $450, or 3) file for bankruptcy and start over.

He ended up choosing option number 3. As a result of filing a chapter 7 bankruptcy his credit card debts were forgiven, and he was able to surrender his home without the threat of a potential lawsuit to collect the $150,000 of resulting deficiency from him. It was truly a fresh start.

The physical demeanor and appearance of my client from the first day I met with him and the day he filed his bankruptcy were dramatically different. He came to my office an over-burdened man with little to no hope, and left with a renewed spirit who, though he had to make the tough decision to file for bankruptcy, now had the fresh start he needed to get back on his feet.

If you feel that bankruptcy might be an option that can give you relief, please give me a call and I would be happy to offer you a free consultation to discuss your options.