Waiting until the last possible moment to file for a Chapter 7 bankruptcy in South Carolina can have consequences. Although it's true bankruptcy is generally considered a last resort, that doesn't mean you need to put off consulting a Columbia bankruptcy attorney until you're 100 percent sure you have no other option.
USA Today reports that a brand new law review study by the Consumer Bankruptcy Project recently revealed that when people wait months or years to file for bankruptcy, their financial, personal and familial relationships are irreparably damaged.
Waiting to File Bankruptcy is Draining
Some refer to the financial situation in which bankruptcy candidates find themselves by the time they file as an economic "sweatbox." What we mean by that is that people are being drained of their assets. They are losing property, vehicles and other valuables. They're forgoing basic needs like food and medicine so they can swing their mortgage. Some people engage in this juggling act for years so they can avoid a bankruptcy filing.
The CBP project analyzed data from some 3,200 bankruptcy claims from 2013 to 2016, combined with a survey received from 910 of those filers. What they discovered was that among the nearly one-third surveyed, approximately 66 percent were considered "long strugglers," meaning they had been in that position at least two years, sometimes longer. About 1 in 3 had even waited five years or longer. The number of those who waited these long stretches doubled from 2007 to 2016.
The longer people endure that struggle, the worse off they are financially, both short- and long-term. They lose approximately 50 percent more of their assets, compared to those who filed for bankruptcy sooner. Their debt-to-income ratio rises to approximately 40 percent higher than those who don't wait so long to file. Further, about half of those who waited longer were named defendants in debt collection litigation, compared to 35 percent of those who filed for bankruptcy sooner.
There is a stigma around filing for Chapter 7 bankruptcy in South Carolina. But you will recover faster - with less damage - the sooner you take decisive action on it, rather than dragging it on unnecessarily.
When to File for Bankruptcy in South Carolina
Part of the reason people wait so long to file is they don't realize bankruptcy is even a viable option for them. Our Columbia bankruptcy attorneys would urge contacting us for a consultation if you're grappling with the following:
- Debts exceed more than 40 percent of your income. This is one of the greatest indicators of financial distress because it means you likely aren't able to keep up with your debt payments.
- Using debt to pay for other debts. Unless you expect a serious financial windfall, this practice is only going to drive you further into a debt spiral.
- The debts you have could be erased with Chapter 7 bankruptcy. If your debt is primarily student loans and certain court judgments, you may not be eligible. However, if your problem is more unsecured debts, such as medical bills, credit cards and personal loans, a bankruptcy could be a huge relief.
If you are burdened with debt and considering filing for bankruptcy, it's best to consult with an experienced attorney at Matthews & Megna, LLC.