Look at your credit report.
That’s it. That’s the one thing you should do before you talk to a bankruptcy lawyer.
It’s easy and it’s free. All you have to do is go to www.annualcreditreport.com. All three credit bureaus, Experian, Equifax, and TransUnion have to provide one free report per year. That means you can get one report from each of them once a year.
The reason I bring this up is that I often have potential clients who come into my office and wonder if bankruptcy is a good option. To my surprise, many don’t know how much debt they have. Sure, they’re aware that there are creditors trying to collect a debt, but beyond that they don’t know who else they owe.
Before someone even thinks about bankruptcy, they should look at their debt-to-income ratio. If their debt is equivalent to, say, 40% – 50% of the before tax income, it could take more than three to five years to pay that debt off. Bankruptcy may more sense in that case. But of course, we can’t calculate a person’s debt-to-income ratio without know just how much debt they have.
Sometimes people call me in a panic because they’ve just gotten notice that they’re paycheck will be garnished. They want to know what they can do to stop the garnishment. Bankruptcy will stop garnishment, but if the judgment underlying the garnishment is relatively small, filing bankruptcy is kind of like trying to kill a fly with a cannon: overkill.
Looking over your credit report before you talk to a bankruptcy attorney will help you put things in perspective and help you decide whether or not you need to resort to filing.
If you have questions about whether bankruptcy is a good option for you, we hope you’ll come in for a free, no-obligation consultation with an experienced Colorado bankruptcy lawyer. You can make an appointment by calling 303.331.3403 or by using our online scheduling system.