Many people wait until they're sued by a creditor to file bankruptcy. After all, filing bankruptcy stops all creditor actions against you, including lawsuits. But if your financial life is "going South", should you wait that long to file bankruptcy?
Notice that if you wait until you're sued to file bankruptcy, you've given the power to decide when to file bankruptcy over to the creditor that sues you. If it would have been better for you to file bankruptcy earlier, you've let that opportunity pass by and instead let the creditor decide for you.
Why might it be better for you to file bankruptcy earlier? Here are two major possibilities.
• You might have missed your "window of opportunity" for bankruptcy. You might be making too much money to do a Chapter 7 bankruptcy (the one that gets rid of your debts quickly), but were making less before so it would have been OK then.
• You might have "gone through" money that you could have kept during your bankruptcy. If so, by filing earlier you would have had more money after your bankruptcy for your Fresh Start.
The real problem is considering bankruptcy to be a last resort, which is why many people wait until creditors sue them to file bankruptcy. When you consider bankruptcy to be a last resort, you miss the opportunity to make bankruptcy work best for you.
The moral to this story is to consult with an experienced bankruptcy attorney sooner rather than later when you have serious financial problems. That way you can see what action would be best and when it would be best to take that action. Don't give the power of choice away to your creditors!
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