1. “Time will heal my financial troubles!”  While time can heal some wounds as the old cliché says; it doesn’t usually work that way when it comes to your finances.  Delaying a necessary bankruptcy will over time destroy your finances by making you vulnerable to lawsuits, wage garnishments and asset grabs.  Without bankruptcy, time often destroys not heals your finances.
2. “Once I get a job I can pay my debts back, so I don’t really need to file bankruptcy.”  If you only owe a few thousand dollars and get a decent paying job after being unemployed for a few months, then no, you probably don’t need to file bankruptcy.  But if you are several months behind on your mortgage, owe tens of thousands in credit card debt, are facing repossession and have been unemployed for six months or more, bankruptcy is probably a better bet. Getting a job won’t necessarily fix those problems in the way you hope.
3. “I can settle my debts with my creditors once I come into some money.”  This delusion is in the same family as delusion number two.  Avoiding bankruptcy because you hope to “come into” some money and pay your creditors in one grand swoop is not realistic or healthy for your finances.  What will most likely happen is that once you “come into” some money, creditors will swoop down to grab the money via garnishments if you don’t protect yourself with bankruptcy.

1. Credit repair companies can wipe bad history off my credit report.  False. Credit repair agencies have no power to remove negative information from your credit report if the information is true.  If there is negative and factually incorrect information on your credit report, you don’t need a credit repair company to remove it.  Simply dispute the false information by contacting the credit reporting agencies via letter.
2. Credit repair companies can give me a “fresh financial start” by giving me a new credit identity. False. Some unscrupulous credit repair agencies engage in the illegal practice of creating new credit files for their victims.  But this practice can land the debtor in legal trouble.
3. If I stop paying my bills it will force my creditors to the negotiating table.  False.  Many credit repair companies encourage debtors to cease payment on their debts and to redirect their money to the credit repair agency.  This is a mistake.  Many credit repair agencies have been known to create more problems for debtors because after the debtor follows their “stop payments to creditors” advice they are hit with several lawsuits.
4. Credit repair agencies are better equipped to place me in an affordable repayment plan with creditors.  False.  Many credit repair companies carelessly place the debtor into repayment plans which are unaffordable and unsustainable.  Also, many credit repair companies fail to include all of the customer’s debts in the repayment plan which can still leave the debtor in financial trouble.

1. Rising costs, stagnant social security and falling retirement account values is partly responsible for the rise in seniors filing bankruptcy.   Even though inflation is largely being ignored, anyone who has to go out and purchase food, clothing or fuel knows that the cost of goods and services is rising rapidly.  These rising costs dwarf the miniscule amount of money seniors receive in their retirement years, even after accounting for both their social security payments and 401(k) payouts which have shrunk because of losses during this recession.
2. Medical costs and the out-of-pocket expenses associated with Medicare are also responsible for the rising number of seniors filing bankruptcy.  Many seniors fail to anticipate the true cost of medical expenses when they are planning for retirement.  This lack of preparation can leave many seniors with tens of thousands of dollars in medical debt which they can only get rid of in bankruptcy.  One of the biggest expenses, long-term care, is responsible for sending many otherwise financially healthy seniors into bankruptcy.
3. Pre-retirement debt is another huge factor in why many more seniors are filing bankruptcy than in the past.  Many seniors are retiring with large credit card debts and mortgages they can’t afford once their incomes are slashed in retirement. Filing bankruptcy allows them to discharge their unsecured credit card debt, medical debt and to focus their fixed income on paying their mortgage and other essential expenses.

The foreclosure case of Williams, a 52 year old executive of a food distribution business is probably one of the most bizarre and telling examples of foreclosure madness run amok.  Williams lives in a 3,500 square foot home with a $2500 monthly mortgage on which he was never late.  His credit score was 795 out of 800 and he was current on all of his bills.  But when Williams tried to pay his mortgage online, he was told that his mortgage company had put a “stop” on his mortgage account.  He later discovered that they had put him on the foreclosure assembly line and that the mortgage company would not take any future payments from him. After repeated calls and letters, the executive has not been able to get his home out of foreclosure even though the mortgage company has admitted that they lost his mortgage paperwork.

The Williams foreclosure saga is just one of the stories that we know about.  Here we have a well-paid executive who has a high credit score and is probably positioned well in other ways; but he cannot get off of his mortgage company’s foreclosure assembly line even after the company has admitted errors.  What about the less privileged homeowners who might be paying their mortgage on time; but who are not sophisticated enough to understand that they have the right and power to fight a foreclosure? What about the elderly who have mortgage free homes now facing bogus foreclosures?  Those people are vulnerable to losing their homes when they don’t deserve that.  When are our political leaders going to take a stand and make these bank executives pay with prison time for the blatant disregard they have shown for American homeowners?  After we have allowed the banks to get away with peddling toxic mortgages, failing to make a good-faith effort to stop foreclosures with affordable modifications and now literally stealing homes with significant equity through a foreclosure process that is error prone, it is time to take a stand.

1. Credit cards to the max. If you’ve maxed out all your credit cards, are charging more each month than you can possibly pay, are making only minimum payments on your credit cards, or are using them to pay off essential, everyday bills, you may definitely be in way over your head.

2. Equity—what equity? Using your home equity in order to take out loans so you can pay for items other than home improvements is also a potential warning that you may well be headed for financial disaster. If you’ve been paying on your home for years and yet have little to no equity to show for it, it’s definitely time to consult a bankruptcy attorney.

3. Emergency funds on life support. Living paycheck to paycheck is a common reality for many Americans, but if you have little to no savings to draw on in case of an emergency, all it takes is one medical catastrophe to drive you to the brink of bankruptcy. In conjunction with other warning signs, this may definitely signal the need to consult an attorney.

4. Being Under-insured. Related to medical catastrophes is the fact that many Americans are either under-insured—or not insured at all. With medical expenses skyrocketing, those who do not have decent medical coverage are forced to avoid going to the doctor until facing life-threatening illness or accidents, and then it may be too late for treatment. Even those who manage to make it in for semi-regular checkups may well find their financial resources depleted by one costly hospital stay or surgery.

5. Threats of foreclosure or repossession. Is your mortgage lender threatening foreclosure? Has the dealer repossessed your car? Losing your home or mode of transportation can well be the first domino that leads to an out-of-control spiral you may not be able to make it out of. If you don’t have reliable transportation, you may lose your job. Without a roof over your head, you and your family may be forced to live with family members—if that’s even an option for you. In a worst-case scenario, your family may be forced to split up to stay with different family and friends. Not an ideal situation for close families who depend on each other.

These are just some of the typical bankruptcy warning signs. Just remember that you don’t have to wait until the bell of financial doom tolls—talk to a bankruptcy expert now and you may well minimize the damage later. It’s always better to file for bankruptcy on your own terms rather than being forced into it after having already lost everything.