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Bankruptcy is a very effective tool to deal with financial problems. There are times, however, when it just does NOT make sense. The following facts are from a consultation where I advised AGAINST a filing.

The gentleman had a condominium which had become a financial burden. Like a lot of property purchased shortly before the financial crisis, this one had depreciated significantly. It was a small, 840 square foot condo purchased for about $300,000 in 2006. Upon listing with a realtor, the best offer he could draw $185,000, but the lender would not approve the short sale. He had two mortgages. The payment on the first was about $1,400/month, and the second was about $400/month. The monthly condo fee was $275/month. With rent coming in at $1,500/month, he had to put in $575 a month from his own pocket to carry it. He had recently been pre-approved for a loan to purchase a larger $400,000 for his wife and new baby. He complained he could not afford to keep on paying the condo.

Given his income of $82,000 a year and wife's $51,000 a year, if they declared bankruptcy, they would likely not qualify for a simple Chapter 7 and would have to pay all disposable income into the court for the next five years. Furthermore, the wife had $16,000 in a money market fund, so the minimum contribution over time would have to be a minimum of $11,000. (Since the couple lived in Virginia, that state's $5,000 homestead exemption would apply.)

I advised him that bankruptcy should be only a last resort. Instead, there are other options that should be explored first. The $16,000 cash (and possibly additional funds from a hardship distribution from the $60,000 they had in a 401K) could be dangled in front of the second mortgage lender to try to obtain a lump sum payment in return for a release of the second mortgage. The second mortgage was, for all practical purposes unsecured, so that if the property went to foreclosure, the second would end up with nothing anyway. Some money would be better than none, to this lender.

Once the second mortgage was gone, the net negative income would drop to about $175/month, which could be manageable with some belt-tightening of his household expenses. Furthermore, the net debt against the property would drop to about $232,000 (the amount of the first mortgage). With a present value of $185,500, the property could recover to positive range in a few years.

The situation would not be entirely cost-free, but the trade-off -- in this case -- to a bankruptcy filing, in my opinion, was worth it.

It's the policy of this office to be absolutely honest, even when we lose business. We win by knowing we do the right thing for our clients or prospects.

Nevertheless, in the end, it's the client's decision, and we respect that. Call our law firm, if you want to discuss your situation.

I recently started to do some financial video lessons for www.ehow.com. Everyday, I realize how poorly we are all educated about handling our money. To think that two-thirds of our economy is built on consumer spending yet we don’t teach anything about personal finance in school or about the value of saving. Come to think of it, maybe this is why we are not taught how to handle are money…
I hope to do my little part in broadening financial education through these financial education videos. Don’t worry, they are short and to the point- plus, I’m sure they will get better the more I do.  A transcript of the video follows or you can watch the video here.
More and more people are are retiring with mortgages on their homes. So don’t feel bad if you still have mortgage. Don’t feel like you’re being the curve. It’s not necessarily a bad thing but the most important thing to think about is whether can you afford to have that mortgage when you retire. You have to make sure you can budget properly with the mortgage in mind is that’s going to be a fixed cost until the end of the term. So one possibility would be to pay off your mortgage with the savings that you have which is sometimes thrown out there as an option for people who have a mortgage going into retirement.
I do not recommend this. I think it’s more important that you have your savings available to you then you can use that money in other ways and keep your mortgage. I would instead like to propose a couple other options on what you might be able to do if your mortgage might be a little too much and does not fit into your budget of what you need for retirement. I mean the first option I recommend would be to move out of your house to smaller house. That way you are going to save that expense. I know the family home is important and it has a great sentimental value but if you can you would really benefit yourself greatly if you move to a smaller house, cut down on the mortgage payment or hopefully have no mortgage at all with this move to the smaller house.
Second, what you could think about is a 30 year mortgage, entering into a new one. Interest rates are at historic lows. You could capitalize on that. It puts the payment down at a lower rate and then there might be some left over when you die but it most likely won’t be a huge amount and it will benefit you with a lower payment throughout your retirement.
Third, perhaps you can work it out with your children so that they can pick up a percentage of your mortgage. You could deed the house to them, enter into a new mortgage with them or outright sell the house. There are various strategies you could pursue along that line that could keep the house within the family and I recommend inter-family transfers as a way to get around reverse mortgages which I do not recommend. The fees and expenses in a reverse mortgage eat up the equity in your house so quickly that do not consider reverse mortgages as an option. I’m Ted Connolly and that’s how to retire with a mortgage that’s not paid for.

Growing up in El Paso and being Hispanic, I was brought up with the mentality that Bankruptcy was wrong.  Since I started working at Diamond Law almost 3 years ago, my mentality on Bankruptcy has changed.  Bankruptcy to so many people is a scary step to take. After working with so many clients throughout these 3 years I have witnessed the relief bankruptcy (Ch 7 and Ch 13) has brought to them. 
 I can’t say all of our clients have experienced relief.  It's a shame really, since occasionally I see some clients staying stuck in old patterns - the negative mentality towards Bankruptcy. Why - because they judge themselves as failures and they fear being judged because they judge - shame and embarrassment.  This mentality irritates me now because life isn't fair and circumstances kick you in the teeth and you're left without options.  It is so unfair to be judged negatively because you made decisions that were in your control when everything else was so out of control.  
 Many people come into our office in a state of denial.  Somehow their finances are all but a nightmare and their expecting to wake up one day and all is well.  Now, if you are currently in that mental state - get real - financial miracles rarely come.  Honestly, all that denial just adds more stress on yourself and your relationships. 
 Now, we are not miracle workers at Diamond Law although we really do try. We can only be as much help as our client's allow.  No more self sabotage - no more procrastination.  This help really comes from within - believing in yourself again, regaining self-worth.  Don't let old ideals stand in the way of your financial wellness because we can help you if you let us.  Bankruptcy's public policy should be thought as: a fresh start for an honest debtor.

Once a realm where where only the richest dared to dwell, more and more of the other 99% are looking into the world of asset protection.
And rightfully we should, as making money is only half of the battle. Holding onto the money you’ve made is the biggest challenge these days. As we see what little money we have being eaten up by taxes, fees, interest, and even lawsuits, we need to be more and more conscious of how to protect our assets.
Sensing this change, Nevada has taken a giant step forward in becoming the “go-to” place for asset protection.
Nevada enacted 2 laws that provide greater asset protection than you will find in most states, according to Mass Lawyers Weekly.  The first law contains a provision that allows trusts set up in other jurisdictions to be moved to Nevada without re-starting the applicable statute of limitations.  The second law makes charging orders the exclusive remedies for creditors against certain corporations, LLCs and LPs.
While it is not uncommon for states to recognize spendthrift trusts even though the settlor remains a discretionary beneficiary, the updated Nevada law broadens the type of spendthrift trusts available to explicitly include a charitable remainder trust, a grantor retained annuity trust and a qualified personal residence trust.  In addition, the new law extends that protection to trusts from other jurisdictions so that the spendthrift trust property is protected from future creditors after the two-year statute of limitations period has run, no matter what state the trust was established.  Moreover, under the new law, grantors can avoid any estate tax implications by excluding the trust from their estates because their self-settled spendthrift trust is viewed as a completed trust gift.
Second, the other, new law makes charging orders the sole remedy for creditors against Nevada LLCs, LPs and some corporations (non-public S and C corporations with one or more shareholders but fewer than 100.).  Charging orders are basically liens on the membership interests in LLCs and LPs and are usually worthless.  In addition, the new law does not give judges to option of issuing an equitable remedy.  Equitable remedies, like a constructive trust or a reverse veil piercing, allow a judge to do an end-run around statutes like the Nevada’s, because they make the entity’s assets available to the plaintiff where they would not have otherwise been available.
One caveat:  Courts in other states are usually more inclined to use the laws of their states in interpreting the protections of the Nevada trust or LLC.  Nevertheless, Nevada’s law may reverberate across the country.