You may think that filing for bankruptcy is never a good idea. While there is certainly some stigmatization attached to bankruptcy, there are some good times and good reasons to file. Here are some examples of when filing for bankruptcy is a good idea.
You Have Won the Lottery and Do Not Want Your Creditors to Take Your Money
Just when you think it would never happen, you win the lottery. Not just any lottery, but the big, big jackpot. While most people may be inclined to pay off their debts with some of this money, the truth is that many creditors could attach numerous penalties and fees to your debts and then sue you for even more if they find out you have come into some major cash.
Despite the fact that you would want to do the responsible and right thing, it does not mean that your creditors would deal fairly and ethically with you for trying. It is in your best interests to file for bankruptcy, include your creditors on the discharge, and get close to completing the bankruptcy before you claim your major prize. Talk to your bankruptcy lawyer how to best handle this unique situation.
Your Inheritance Hinges on Being Debt-Free
If you stand to inherit a lot of money, but your parents have made it a condition of their will that you be debt-free, you may want to file for bankruptcy then too. It could take you decades to pay off your debts, all the while knowing that your inheritance is just on the other side of that. Additionally, your inheritance could wane from taxes and fees, making it less than what it would have been had you been able to accept it shortly after your parents' deaths. There is also the strong probability of inflation, which would then make your inheritance mere peanuts by the time you clear yourself of debt. For this reason, a bankruptcy would also be a good idea.
Your Assets Would Never Pay off Your Debts
When you are so far in over your head with debt, and your assets (e.g., your home, your life insurance and/or your savings) will never cover your debts, bankruptcy may be the only solution. If you also find yourself on the receiving end of a horrific lawsuit, bankruptcy can release you of enough debt that you can address whatever ruling on the lawsuit you receive. If you feel like your debts and lawsuits are about to squish you flatter than a cockroach between two rocks, your bankruptcy lawyer can help.
Reach out to a professional like Thomas W. Bauer, Esq., C.P.A. to learn more.