Olga Zlotnik

Financial Trouble can Happen to Anyone

Financial Trouble can Happen to Anyone
Navigating the Bankruptcy Tide:
Tips to Help You Stay Dry and Steer Clear of Bankruptcy

Olga_Zlotnik_profileWhen people are being hounded by creditors and going through tough financial times, they come to me for help.  In listening to, advocating for, and helping my clients, I have had the privilege of learning some financial do’s and don’ts.   The truth is that financial trouble can happen to anyone.  For example, job loss, which often times means that there is no longer enough money to pay the bills, is one common reason why someone you know may be forced to file for bankruptcy.  The loss of a job usually is the type of financial hardship in life that is out of our control.  But, some financial issues can be avoided with help and guidance.  In prior issues, I introduced you to the first eight tips to staying out of bankruptcy. Here are the next two tips:

Tip 9: Do Get Long-Term Disability Insurance.

Have you ever thought about what would happen financially if you or your spouse became too sick or hurt to return to work for a very long time?  While you may have some money to cover bills for a few months or maybe even a year or so, do you have enough money to cover years of bills?  An average long-term disability lasts approximately a few years.  When people get too sick or hurt to return to work, have no income or money coming in, and don’t have enough money to pay the bills, they can be forced into bankruptcy.  You have insurance on your car and house, and probably health insurance as well.  It is equally important to have long-term disability insurance to make sure you can support your family in the event you are unable to work for a prolonged period of time (check with your employer to see if you have it and if you do, find out how much would be covered).  Long-term disability insurance will guarantee you a certain amount of income for a very long period of time.  I’m not an insurance person nor do I purport to be one.  But, because I have a young son, a mortgage, bills, and so forth, I have a long-term disability policy and so should you.

Tip 10: Don’t Take Out Home Equity Lines of Credit.

After a foreclosure, Arizona homeowners sometimes ask, “is bankruptcy the next step for me?”  The reason homeowners consider bankruptcy is because they worry that the lender may have recourse against them to collect additional money or what is called a “deficiency.”  A deficiency is the difference between what was owed on the home loan and the value of the home or what the home sold for at the foreclosure.  In today’s economy, there usually is a deficiency owing after a foreclosure.  The good news is that in many residential cases, a lender cannot legally go after an Arizona homeowner for a deficiency after a foreclosure (assuming the loan and property meet certain criteria).  Usually, the lender’s only recourse is foreclosing on the home.  But, if you default on a home equity line of credit and did not use the home equity funds to purchase or remodel your home, you can bet that the lender will probably be able to pursue you for a deficiency, if any.  When a lender sues or tries to collect a deficiency from you on a home equity line of credit and you can’t pay the lender or settle, then bankruptcy may be the next step for you.

Stay tuned for next month’s issue on additional tips to help keep you dry and out of bankruptcy.  For more information on bankruptcy, debt, and litigation-related issues, please visit www.olgazlotniklaw.com


Please note that the information provided is for informational purposes only and does not constitute, and should not be considered legal advice. Transmission of the information contained here and receipt by the reader is not intended to create and should not be construed as creating an attorney-client relationship. The only way to create an attorney-client relationship with us is through a written and signed agreement with us.  The bankruptcy law services described herein are with respect to bankruptcy relief under the Bankruptcy Code. We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.