Bankruptcy Reality Check

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Occasionally, a client will come into our office with an annual income ranging from $15,000 to $30,000 per year and $20,000-$30,000 worth of credit card debt . One of the first things that the client will tell us is that his credit rating is “A1.” All credit card payments have been made on time. Thus far, he has had been ‘keeping up’ on all of his obligations. In the most technical use of the terminology the client is correct. In the real world, the client is likely just fooling him- or herself.

Taking a cash advance on credit card ‘A’ in order to pay the monthly payment on credit card ‘B’ is not ‘keeping up.’ Neither is using current salary to make the monthly payment on the credit card while at the same time using the credit card to buy food and clothing in amounts which exceed the credit card payments. Indeed, the client is falling further into debt each month, using another’s resources (the credit card company’s) to cover the spread.

If this describes you, the ‘reality check’ referenced in this article’s title is merely a suggestion to you to take yourself by the shoulders, give yourself a good shake and see your situation for what it is. At some point in this process, you must realize that you are falling deeper into this credit vacuum. You soon may not be able to pull yourself out of it. There comes a point when you must recognize that you are using another’s money (not yours) to keep up with the bills, and that you have no real ability to pay it back. When you know this, and yet you continue to draw on those funds, there is a much more serious term that is applied to what you are doing. At some point it is no longer “borrowing.”

Stop and take a breath. Then take whatever steps are necessary to bring you back to the point where you are living within your income. Talk with an attorney now about options you may have before the situation gets even worse. (If the attorney only gives you one option–“hire me”–then find another attorney.)

We recognize that it may be embarrassing to speak with someone regarding problems such as these. But that embarrassment is much less than the embarrassment associated with some of the alternatives.

This may be among the most pointed and harshest language used on this site. Please take it in the spirit in which it is offered. It is intended to be helpful, not accusatory. It is in all senses of the word, however, intended to be a ‘reality check’ and a call to action.