Do I have to give up everything I own to file bankruptcy? No!

property 2I am asked this question probably once a week.  Many people believe that they must lose everything they own to file for a bankruptcy.  This is not true.  I believe that this comes from some of the guilt and shame that people feel when they file.  They believe that they are doing something almost dishonest.  They believe that they must “honor” their debts.  The collection agencies that attempt to collect on these debts will encourage these feelings of guilt to dissuade people from filing for bankruptcy and to get people to pay them.

Many of my clients also believe that they have somehow failed when they file for bankruptcy and failure is just not accepted in this country.  They then try for years to pay debts that they cannot afford thinking that they will then not be failures.  I usually remind them that many successful companies have filed for bankruptcy over the years and individuals have the same right to do so.  In fact the filing of bankruptcy can get rid of debt and put an individual on the road to success.

The reality is that bankruptcy is a legal and moral solution to your debt problems and you can keep most of your property in the bankruptcy.  This is because there are very generous bankruptcy exemptions.  These exemptions allow you to keep a lot of stuff.  Your retirement funds can be kept with one exemption, your car with another, a certain amount of jewelry with another, and even “tools of the trade” if you own a business or use those tools in your line of work.

In addition there are homestead exemptions for equity in your house and the contents in your house, like our personal belongings and your clothes, can usually all be exempted.  Anything that exceeds these exemptions can be put into the $23,000 “wildcard” exemption which can be used for cash, stock, bonds, or anything else.

Insurance and social security money and your current income are also exempt so call a bankruptcy attorney if you need a bankruptcy and get a consultation about your property.  Most likely you can keep it.

I am a San Diego bankruptcy attorney.  For further questions please visit my websites at www.farquharlaw.com or www.freshstartsandiego.com.  Or call my office for a free consultation or for any other advice about bankruptcy or debt at (619) 702-5015. Call now for free credit report and analysis!

For a free e-book on “13 things to do to prepare for your bankruptcy filing” please e-mail me at farquharesq@yahoo.com.

Photo courtesy of Alan Cleaver

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Failure becomes success! Bankruptcy can turn what you think is failure into success.

We live in a country that worships success.  We are trained to seek success and successful people and we hold those who are successful in high esteem and we wish success desperately for ourselves.  Being called a “loser” is for some the worst kind of insult in our success driven culture.

We also have an aversion to failure.  Failure is something to be avoided at all costs.  It means in America that you must hang your head, get depressed, and it can mean worse.  After a failure you feel alone, isolated, and unworthy.  You may even feel that something is wrong with you as you look around you and it seems that everyone else has no problems.

Over the last few years a different paradigm has become more popular.  The idea that we learn more from our failures than from our successes has rung true for many.  People have come to realize that though a success may give you a false sense of superiority or invincibility and cover up other weaknesses, a failure may reveal to you areas in your life that need improvement or areas where you need to do more work.

You truly can learn from failures or experiences of failure more than you can from a success.  After a failure most people inevitably examine everything they did to get to that point with an eye to the future so they don’t repeat the failure.  In that critical examination a whole lot is learned about oneself and one’s actions and beliefs and goals. With a failure you are forced to ask what is truly important or what does success really mean.  Rarely does such a critical reexamination take place when one is successful in anything and if success comes too easy to people then they are robbed of a very great opportunity.

Think of the child stars for instance.  How many of them are functioning, well-adjusted, and happy adults?  And how many would you consider to be a success?  Very few.  Many child stars have extreme success at a very early age.  They get money, fame and fortune enough at an early age to set them up for life.  But we all know that these children usually grow up to be very disturbed adults.  Why is that?  Because fame and fortune came too early and too easily.  They were truly robbed in life of the opportunity to struggle and fail.  The struggles and the failures are a necessary and essential element of life.

According to a Harvard grad success is not all it’s cracked up to be anyway.  It can often feel like failure.  A Harvard student wrote an article on how he didn’t feel successful even after graduating from Harvard.  This should have been a time for him to celebrate success but his graduation left him feeling empty.

He began to describe in the article how students are taught at Harvard to be risk averse.  They are protected from failure and never allowed to fail.  These Harvard kids have known nothing but success as they graduated with honors from high school and now they have a Harvard degree.  But the author concludes that Harvard students have been robbed of their chance to fail.  He makes my point that failure is a tremendous learning opportunity and people need to risk failure instead of avoid it.  When it happens embrace it and learn from it.

The old adage that we learn more from our failures than our successes is true.  I have learned more from my failures than my successes in life and if you think about it the same will be true for you if you have been lucky enough to have failed at something.

I had a failed in a business venture that I desperately did not want to let go because I did not want to appear to be a failure.  It was very difficult for me to close the business and admit failure even though the business was losing money and obviously needed to be closed.  But after I did close the business I engaged in the mandatory self reflection that was a great benefit.  I learned to never make some of the mistakes I made again.  I readjusted my life and went out and retried everything.

The same can be done with your financial failure.  You at first will resist and try to make your situation work.  All of my clients do.  You will try to work harder and smarter and pay off your credit cards and other bills.  When this doesn’t work you will resist failure strongly.  When you finally break through and admit that a fresh start will help you then you will be ready.

Your debts can be wiped away while you move on debt free.  A financial meltdown can be a tremendous learning experience just like any failure can be.  You will learn more from this experience than the person who has no such problems will.  You can and will learn to live with in your means and manage your credit wisely as we all must.  Very few people are “serial filers” who continue to file bankruptcies.  Most learn their lesson and move on debt free and change their lives.

Donald Trump and many others who are considered very successful have used bankruptcy to get a fresh start, learn from their mistakes, and move on with new knowledge and a new life.

So embrace failure and welcome it as an opportunity to reflect, learn, grow and adjust.  Think of failure as a blessing and as a pathway to success and you truly will get success through failure.  (See my article on why you should file for bankruptcy).

I am a San Diego bankruptcy attorney.  Please visit my websites at www.farquharlaw.com or www.freshstartsandiego.com.  Please call for a free consultation on any bankruptcy or debt related issue at (619) 702-5015.   Call now for free credit report and analysis! 

If you or someone you know may need to file a bankruptcy then please get my FREE E-BOOK “13 THINGS YOU SHOULD DO TO PREPARE FOR YOUR BANKRUPTCY FILING” by e-mailing me at farquharesq@yahoo.com.