Waiting to File for Bankruptcy Can Be More Damaging

Posted on : July 2, 2018, By:  D.C. Higginbotham

Many people who end up filing for bankruptcy have put themselves in a much worse financial situation than they would have if they had scheduled a consultation with an attorney. A 2018 law review study found that the longer people wait to file for bankruptcy, the more they struggle.

The time that a person waits to file for bankruptcy can be known as a sweatbox. The pressure keeps mounting the longer a person is in this financial situation and is unable to get out. If you keep thinking that things are going to get better but you’re just falling farther and farther behind, this dangerous situation requires help from a lawyer.

The sweatbox is the period when people are facing lawsuits filed by debt collectors, serious asset depletion and having to give up basic necessities like groceries in order to avoid filing for bankruptcy. Many people do not want to acknowledge the severity of their debt, according to the research, which analyzed data from the consumer bankruptcy project. This long term academic research study looks at people who have filed bankruptcy, why they file and the possible consequences of doing so. More than 3,200 bankruptcy cases were included in the ‘Life in the Sweatbox Study’; those cases that were filed between 2013 and 2016.

More than 66% of people inside the recent analysis were considered long strugglers or those who waited in what the researchers categorized as a sweatbox for two years or longer. Nearly one-third of the study participants waited five years or longer to ultimately file for bankruptcy. The longer that people stay in that sweat box situation, they face more debt collection lawsuits, had a high median debt to income ratio and have the median assets compared with other debtors. The sooner you schedule a consultation with a bankruptcy attorney, the more you will be clear about your next steps.