Human nature compels most of us to put off things that are unpleasant – or at least perceived to be unpleasant. Certainly, a visit to a bankruptcy attorney would rank up there with one of the least anticipated appointments on a calendar. However, like many type of medical visits, needless delay can be extremely costly or worse to the bankruptcy process. As I say so often, it rarely gets better with time.
Obviously, if a financial condition is temporary and there is a financial fix in the near-term future that will yield sufficient funds to satisfy the indebtedness, then certainly bankruptcy should not be rushed. In such cases, we would normally attempt to dissuade that individual from filing at all, as bankruptcy should always be deemed a “last resort.” However, if the bankruptcy is necessary because there exists no other reasonable way to resolve the financial issues – then the delay only tends to exacerbate the already difficult situation. Undue delay can result in:
- Collection Lawsuit and Judgments
- Liens against real estate, some of which may not be resolvable by the bankruptcy filing
- Levies against bank accounts
- Wage Executions
- Liens against automobiles
- Information Subpoenas, which have court contempt ramifications if not complied with
If the debt involves the Internal Revenue Service or State of NJ – Division of Taxation, they have extreme collection methods available including filing tax liens against all property, not just real estate. This turns the debt (which potentially could have been extinguished) into a secured obligation which is not automatically eliminated in a bankruptcy.
If the debt is from a mortgage company, the extended delay can easily result in a foreclosure actions and thousands of dollars in added fees and costs attached to the mortgage. If the delay is too extreme, then sometimes the cost of saving the house is too prohibitive even with the provisions of a Chapter 13 bankruptcy filing.
The purpose of this article is not to push anyone into filing without due consideration, as it is a serious step with clear implications to one’s finances and credit. Rather, once the decision is reached that the bankruptcy filing is financially necessary, we encourage our clients to move as quickly as possible to get the petition filed and obtain the protection from the Bankruptcy Court. This will not only free them of collection harassment but also ensure that no further harm can transpire. Furthermore, taking that first step towards re-establishing one’s financial stability can be quite rewarding in itself.
Bankruptcy is meant to be a “fresh start” and there is normally no compelling reason to put that off for weeks, months or years.