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Bankruptcy: The BEST Christmas Present. For Your Family!

By Joseph McDaniel, Esq.

Loyal readers know that what makes me sadder than anything else is meeting lovely people who have spent every single penny of their retirement savings, pulled all of the equity out of their lovely homes, and lived on cat food, in a doomed and futile effort to pay their overwhelming debt.

Those folks have eaten more suffering than they needed to (along with the cat food, which does have a pretty good level of protein!), and made their later years more materially barren than they needed.

Just as important, they have made it somewhere between unlikely and impossible that they will have anything left for their children.

Twenty years ago I expected to watch the largest transfer of wealth in the history of mankind, as my generation got older and started giving it's stuff to the kids.

That transfer hasn't happened as well as I would have liked.

The wealth, to a large extent, went "poof", and vanished!

Hopefully, the kids'll make more wealth for themselves, but that may not be as easy as it was for folks in my generation, when we still had factories and good jobs here in the United States; or the kids may decide that outsourcing may be good for India and China, but it's sure not so good for the United States, and build factories here in the United States again.

It will be interesting to watch.

But here's my Christmas Wish for everybody with overwhelming debt: that you read the bankruptcy homework on my blog, and that you find the strength to dump your overwhelming debt before you spend all the dough in your 401(k) on your overwhelming historic debt.

Why would I want that for you?

Well, while bankruptcy after 2005 is no longer as easy, safe, cheap or predictable as it was before the BARF Act, it's still the best game in town for getting rid of overwhelming debt, while keeping most of your your retirement accounts and any equity that you have in your house (so you know, houses used to have equity!).

DO NOT, by the way, jam a hundred grand into a retirement account in one whack and then drop in to visit with me; any sort of pre-bankruptcy planning is a post-graduate sport, and one you aren't quite ready to practice. DO NOT give away the Mercedes to your sister because it's Christmas, and then come to visit me. DO NOT listen to your little buddies at the gym or the bar, all of whom will claim to be the best bankruptcy experts in the United States (or at least Arizona) when they tell you that you don't need to list all your assets, or you can just put the real property in your daughter's name and file in six months (seriously, duhhhhhh.).

But seriously consider whether your ongoing generosity to creditors who will never be paid in full (take a look at a credit card payoff calculator, for instance) is the best thing for your future, and for your family.

Instead of making the payments on the second and third mortgages, and the hundred thousand in credit card debt, and buying cat food, I'd rather you were taking your daughter to the Orthodontist.

She'll thank you later.

p.s. as you waiver and think and consider and want to find out whether a bankruptcy is "your best option", look at any online retirement calculator. What year do you get to retire if you don't file a bankruptcy?

Is it the year 3000? Yeah, I thought so.

Full post as published by Arizona Bankruptcy Attorney Blog on December 16, 2010 (boomark / email).