Possibly, depending on your circumstances. For example, if you are getting sued (not threatened) by multiple creditors, then you may want to consider bankruptcy. That’s because filing bankruptcy will stop a lawsuit in its tracks. However, you want to first attempt to settle the debt should you want to avoid bankruptcy. If you do not have funds saved to attempt a settlement, and still do not want to file, then you want to investigate to see how the creditor would be able to collect should they be successful in suing you and awarded a judgment.
Depending on your state laws and statutes, judgments are typically enforced through wage garnishment, bank levy, or property lien. Put simply, just because a creditor sues you and wins a judgment in their favor, doesn’t mean that they can collect on that judgment. What if you’re self employed? Would you garnish your own wages? I don’t think so. What if your checking and savings isn’t in your name? How would they levy your account? What if you don’t own property or have the property listed in another name or trust?
There are plenty of consumers walking around with judgments against them that do not pay them. More so, judgments can be settled and satisfied when the financial situation has improved. So don’t jump into bankruptcy without knowing your options. Unfortunately, many consumers jump into bankruptcy prematurely either because a bankruptcy attorney sold them on it, so they can make money on the deal, or received advice from a friend or stranger who doesn’t understand the alternative options.
Lastly, the new bankruptcy laws make it very difficult to put credit card debt into a bankruptcy filing. Also, you may be forced to attend embarrassing credit counseling services. Bankruptcy is a huge step with implications that will last for many years, so check it out with caution and investigate all your options thoroughly. You should certainly consult with a bankruptcy attorney in your state if you are considering this option.
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