How can delaying filing for bankruptcy harm me?

Bankruptcy is such a dreaded concept for some people that they will do all they can to avoid filing for it. However, even if going through Chapter 7 bankruptcy makes it harder in the future to apply for New Jersey loans or mortgages, delaying bankruptcy is often a worse option. Not only does delaying bankruptcy not improve your financial state, it can make things worse for you.

According to Nerdwallet, waiting to file bankruptcy can deplete more of your assets than if you chose to file as soon as circumstances warranted. Without bankruptcy protection, debt collectors are free to file lawsuits to collect their outstanding debts. Debt collecting efforts may force you to spend more money and effort trying to fend them off in court, deepening your financial hole. Also, the lack of bankruptcy protection can result in debt collectors taking assets like your home or your vehicle.

Delaying bankruptcy may cause your debt to increase in other ways. You might try to pay off old debt with fresh debt, but that does nothing to help you return to financial solvency and just prolongs your agony. However, with bankruptcy, there are debts you can discharge. Without it, you would just continue to accumulate added interest from outstanding debts and increase your payments in the long run.

People may be so determined to stave off filing for bankruptcy that they cut back on essentials to finance their debts. A survey conducted by the Notre Dame Law Review of bankruptcy cases between 2013 and 2016 discovered that 60 percent of people who put off bankruptcy refused to seek medical attention. Additionally, about 32 percent of those surveyed even deferred buying food.

The damage done by putting off filing for Chapter 7 bankruptcy can greatly hinder you from regaining financial footing after the bankruptcy is over. A successful bankruptcy ends the nightmare of debt collectors and preserves as many of your assets as possible. Conversely, delaying bankruptcy can reduce your potential for financial recovery by depleting you of most if not all of your substantial assets.

This article is written to educate readers on bankruptcy issues. It does not offer legal advice.

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