The COVID-19 pandemic has caused financial stress to many families.  Employees are laid off or furloughed.  Business owners are trying to survive extended closures and reduced consumer spending as their former customers deal with their financial setbacks.

If you have had a disruption in income, you may be putting expenses on credit cards and seeing the balances on those getting higher and higher. And we all know how hard it is to pay down large credit card balances.  As you struggle to find a way to pay down those balances, you may think about taking out a loan against your retirement account or even taking money out of your retirement account to pay off credit card balances. 

Before you use retirement money to pay off credit cards, it is worthwhile to find out other options.  I will often have a potential client come to me for a bankruptcy consultation and tell me a story about their efforts to avoid bankruptcy.  Many times the potential client will have raided their retirement accounts to pay down credit card balances.  Sometimes they also have used a home equity line of credit to try to pay off the credit cards as well.  When I hear that, I always cringe, because that potential has used assets that would have been protected in a bankruptcy case to pay off a debt that could have been discharged in bankruptcy.

The time to find out how bankruptcy works and what the pros and cons would be in your particular situation is at the beginning of the time when you have financial stress, not when you are at the end of your rope.  I have many people come in after they have wasted money that they could have kept in a vain attempt to avoid bankruptcy, only to have to file bankruptcy anyway. 

Knowledge is power.  Call my office to schedule a free consultation.  Maybe you will be able to recover financially without filing bankruptcy.  But if you will need to file bankruptcy, knowing that in advance makes it possible to plan for the eventual bankruptcy filing, and that allows you to get the maximum benefit for the minimum cost when you do file.  Planning can make the difference between emerging from bankruptcy with your retirement accounts and home equity intact or emerging from bankruptcy with empty retirement accounts and no equity in your home. 

Call now for a free consultation.  I am doing all consultations via telephone or video conference during the pandemic conditions.