Legal Columns


Filing Bankruptcy Is Not Always the Best Solution 08/07/2017

Our middle school nurse use to prescribe Tylenol whenever a student was ill. Sometimes it worked, but sometimes it didn’t. This became an ongoing joke amongst the students because the nurse would prescribe Tylenol to anyone who felt ill, and the nurse was nicknamed the “Tylenol nurse”. The same goes for bankruptcy. An attorney who recommends bankruptcy all the time as a simple and quick solution to a client’s needs may not necessarily be offering the best possible outcome for the client.

Some of the clients who first come to us want to file bankruptcy without knowing what other options there may be. “Bankruptcy eliminates all debts” or “if I file bankruptcy, I don’t have to deal with annoying collection agency calls” are common sentiments expressed by clients. However, you have to consider the fact that if you file bankruptcy, any asset that you have may end up being liquidated. In addition, the bankruptcy will appear on your credit report for up to 10 years. Also, once you file bankruptcy, you cannot file another bankruptcy again for the next 8 years. Therefore, if bankruptcy is not absolutely necessary and you end up filing bankruptcy, you will not be able to file bankruptcy again if your situation within those 8 years requires you to file bankruptcy again. A bankruptcy record may also have a negative impact on a person’s employment prospects and business dealings. The ability to understand the advantages and disadvantages of bankruptcy, the current situation of the client and what the client wants, and then be able to determine the best course of action is what a well-qualified bankruptcy attorney should be able to do.

Some clients may be more ready and willing to repay their debts, whereas others may have a steady income but are so inundated with debts. An example is the case of Mr. Kim, a client who sought our advice last month. His restaurant had great potential to grow, but because it had not been long since the business opened, he could not afford health insurance for his family. In the meantime, he learned that his wife had breast cancer and went about seeking the best doctors and medical treatments available for his wife. His wife was able to be treated for her cancer, but he was left with a huge medical bill and constant calls from collection agencies regarding his overdue, unpaid bill. His wife even started to receive these calls, and he became concerned that her cancer would come out of remission due to the stress caused by the calls. If he could somehow hold off the collection agencies for a while, he thought he could maybe even start to slowly pay off the bill. That is when he finally decided to seek our firm’s advice to consider filing bankruptcy.

Initially, Mr. Kim wanted to file bankruptcy without considering what other options may be available. Having reviewed his overall situation, we recommended debt negotiation. At first, he was somewhat skeptical about engaging in debt negotiation but decided to go along with it. By negotiating with the collection agency, our attorneys were able to lower his debt by 50% by explaining Mr. Kim’s situation to the collection agency. We also helped to negotiate a feasible payment plan so that he could make monthly payments. Mr. Kim, who is now making monthly payments to pay off his debt, has gained a renewed sense of energy to continue building his business without having to worry about what to do with his debt.

We cannot guarantee a debt negotiation of more than 50% every single time. However, we know well through our bankruptcy expertise and experience that there may sometimes be other alternatives to filing bankruptcy, and by considering all options, we always strive to achieve the best results for our clients. If you are in debt and contemplating whether you should file bankruptcy or not, please make sure to know what all your options are before proceeding to file bankruptcy.