As a Colorado Springs bankruptcy lawyer, I regularly suggest to my clients that getting a financial fresh start means not just getting relieved of your debts, but also protecting your essential assets.
Make sure that you preserve this crucial benefit of bankruptcy by NOT selling, using up, or borrowing against your protected assets BEFORE filing your bankruptcy case.
It’s is much more difficult to get your financial footing if you have nothing to stand on—if you don’t have at least basic housing, furniture, clothing, transportation, and, where appropriate, tools of the trade, unemployment or disability benefits, and retirement savings.
Bankruptcy usually protects most or all of those assets. Chapter 7 protects all “exempt” assets. Here in Colorado Springs our state exemptions are fairly generous, as compared to some other states, so the vast majority of my clients who file under Chapter 7 lose nothing. And if you are one of the lucky ones who has assets worth more than the exemptions, Chapter 13 can protect those additional or higher-value assets.
But bankruptcy can’t protect what you’ve already squandered. It kills me when my clients tell me how they emptied their retirement accounts or sold other assets in a desperate attempt to avoid bankruptcy. Most of the time the assets they sold, spent, or borrowed against would have been completely protected had they filed bankruptcy while they still had them.
It’s easy to be a Monday morning quarterback—to say, after a client comes in needing to file bankruptcy, “You shouldn’t have used up your retirement account to avoid filing.” After all, there are people who have avoided filing for bankruptcy by selling their assets, and of course I never see them because they don’t need my services.
If you’re thinking about selling, or borrowing against any of your assets, do you know whether they would be protected in bankruptcy?
What concerns me are when people make decisions with serious long-term consequences without getting any legal advice about the alternatives. If a person in her 50s cashes in a substantial amount of a 401(k) retirement plan to pay creditors who would be written off, that can put a serious crimp in her retirement lifestyle. Or if a husband and wife sell a free-and-clear vehicle that’s in good condition because they think they’ll lose it if they file for bankruptcy, only to be stuck with a single older “beater” car that can’t reliably get them to work, that decision could really hurt them in getting a fresh start.
For a bunch of reasons, people tend to seek legal advice only when they’re at the absolute end of their rope, after these kinds of dangerous decisions have already been made. Let me help you avoid that. You can get a better fresh start by getting the necessary advice in time to preserve your assets. If you live in Colorado Springs or elsewhere in Southern Colorado and would like to discuss your situation, with no obligation, please fell free to call me at 719 227-8787.