Debt Work-Out in Worthington, MN: Bankruptcy is Not a Last Resort

A recent 2021 study revealed that American household debts reached $14.6 trillion. With over 80% of the country holding debt of some kind, you might feel less alone if you hold debt of your own. This doesn’t make dealing with the stress of debt any easier, though. While money can’t buy happiness, it’s undeniable that financial stability relieves a household from significant stress. For thousands of U.S. citizens annually, bankruptcy is a source of permanent debt relief from many kinds of creditors. Despite this, bankruptcy is still often regarded as a last-resort option. In reality, bankruptcy is an effective tool that’s unjustly stigmatized because of perceived social implications and its impact on filers’ credit. At Behm Law Group, Ltd., we’ve worked with clients in all different kinds of financial circumstances using bankruptcy as a permanent debt work-out in Worthington, MN and the surrounding area.

Debt Work-Out

The best way to use bankruptcy as a debt work-out tool is to stop looking at it as a last-resort option. Viewing bankruptcy as a last hope prevents you from seeing how much the benefits of filing outweigh the impact that it could have on your credit score. While it’s true that your credit will be affected and you likely won’t qualify for certain loans for a period of time after your case is concluded, bankruptcy has many other benefits and it resolves debt quickly and permanently.  To most creditors, a bankruptcy represents a point in time.  Before the filing date, one’s financial life is chaotic and disorganized.  After a bankruptcy has concluded, one’s financial life is much more stable, better organized and simplified.  After a bankruptcy has concluded, you are a very attractive credit risk to creditors irrespective of the fact that a bankruptcy filing is on your credit profile.  Creditors know that your financial circumstances are simplified and they know that they won’t have to compete with so many other creditors to get paid.  They also know that you won’t be able to file bankruptcy again for many years.  They figure that if you don’t pay them they will have a very long time to garnish your wages or levy on your bank accounts and there won’t be a thing that you will be able to do about it.


There are three main reasons why viewing bankruptcy as a last resort might do more harm than good:

  1. Bankruptcy is often a better debt resolution system than other options. Because bankruptcy is stigmatized socially and creditors sometimes want their borrowers to avoid the process so they won’t lose money, other debt relief alternatives are pushed more frequently. Debt resolution options like settlement, consolidation, adjustment, and relief programs market themselves as a way to avoid bankruptcy and fix your debt. However, people always end up spending more money and more time with such programs and they almost never get their debts permanently resolved.  Even with attorney fees, bankruptcy is always cheaper and faster than other non-bankruptcy options.
  2. You could lose years of income. With high interest rates, credit cards and other loans can suck away years of your income while you spend time repaying a debt. If you’re not able to pay off or materially reduce a debt in a timely fashion, the odds are that you will never fully repay that debt. Using bankruptcy sooner to discharge unsecured loans like credit cards and medical bills will save you significant time, money, and stress.
  3. Bankruptcy is almost always not the filer’s fault. Bad things happen to good people. Bankruptcy is a way to permanently resolve those bad things. Most filers had debts that were out of their control. This often includes unexpected medical expenses, divorce, job loss, car accidents, and other unfortunate life events.

If you stop seeing bankruptcy as a last resort option, you can see how it will benefit you to use it as a debt work-out in Worthington, MN. For more information about filing, contact us today at (507) 387-7200 or