Bankruptcy Does Not Solve Income Problems
If you are broke and out of work (or underemployed), and your expenses greatly exceed your income, bankruptcy is not going to help. One of the first things that I do when meeting with a prospective client is determine their level of gross (before) and net (after taxes) income from all sources, including rental income, SSI, Social Security, Retirement, child support, foster care) and compare it to your monthly expenses.
It becomes obvious within a few minutes that some people are living above their means (“there outgo exceeds their income, therefore their income shortfall becomes their downfall”). Well, I can’t solve that problem. Usually, their lifestyles have been supplemented by credit cards used to pay for essentials or they taken loans against their retirement income (or cashed them out all together). In these situations we talk about all the alternatives to income problems, including lowering expenses and bankruptcy. But bankruptcy in and of itself does not solve this problem. So, if you’re spending 50 to 60% of your income on your “dream home”, filing bankruptcy is a waste of time until you address the root of your financial distress – your expenses are too high and your income is too low.
This is a common situation with a lot of the adjustable rate mortgages doubling or tripling the monthly payment. The clients bought the houses at the height of the housing boom on a “pick a pay” loan that allowed them to “afford” their house payment, but now the market and terms have adjusted (that’s why they call them adjustable mortgages) and now they simply cant afford to pay the mortgage, put food on the table and gas in their cars. So, they turn to credit cards or raiding the retirement account to make up the short fall. They are really just delaying the day of reckoning.
If the day of reckoning has arrived and you need to have a frank discussion about options and a little shock therapy or a financial intervention we can help. You might not like what you hear, or more likely you just need someone to read you the riot act about your finances – I promise there is no yelling, screaming or name calling, just a cold hard financial analysis so you can begin to make decisions.
Disclaimer
Fresno-Bankruptcy-Lawfirm.com is owned by the Law Offices of Jeffery D. Rowe. We are a debt relief agency. We help people file for bankruptcy relief under the Federal Bankruptcy Code (Title 11 of the United States Code). If you would like to discuss your situation in further detail, please call our offices at: (559) 228-1500 to schedule a consultation. We offer Spanish and Interpreters for our bankruptcy clients
