The Benefits of a Clean Slate

Sometimes, bankruptcy clients are faced with tough decisions. Should you try to keep property and reaffirm your debt, often for years into the future, or should you let the property go in exchange for a discharge? When the property has sentimental value to you or its perceived market potential is high, you may be reluctant to surrender it. However, in some cases, it may be better to start fresh with a clean slate and acquire new property in the future. This decision is not one to be taken lightly. Your bankruptcy attorney can help you make these difficult choices by guiding you through the entire bankruptcy process.

When Should I Give Up Property?

Essentially, the choice to give up property comes down to a mathematical equation: the value of the property minus the cost to keep it. If the resulting figure is positive, you work to keep the property; if it is negative, you give up the property. However, in real life, the decision may not be that simple. Suppose, for example, your family home where your children have been raised is the property in question. There may be an emotional tie to this home that is worth more than money. In that case, it may be worth your while to explore options to keep the property, even if it would be more cost-effective to let it go. However, bankruptcy often involves difficult choices. In some cases, you may not have the option of keeping property, so it is important to consult with a knowledgeable attorney to help you determine the best course of action.

The “Clean Slate” Theory

Some bankruptcy experts take the “clean slate” approach and advise you to give up all property and receive a discharge as quickly as possible. Their reasoning is that with cheap and widely available credit, you can always acquire replacements in the future. This theory has its merits, but it is not appropriate in all cases. In general, you want to rid yourself of as much debt as possible. This means that if you have the option of surrendering property to a creditor, it is often a good idea to do so. However, it may be cheaper to keep your car or home and reaffirm that debt, often at a lower interest rate, than to try to buy replacements for those expensive items. Talk to the bankruptcy attorneys at the Oswalt Law Group in Phoenix today and learn more about how to evaluate your own property in light of a bankruptcy filing.