The Dangers of Waiting to File for Bankruptcy


The decision to file for bankruptcy is not an easy one to make by any means. Many people prefer to hold off on taking the decision for as long as possible. Their reasons for delay can be based on many misconceptions, including the belief that bankruptcy is admission of financial failure.

When it comes to filing for bankruptcy, however, waiting can be dangerous and can make that person’s situation worse than it was from the start.

A recent Notre Dame Law Review Study titled “Life in the Sweatbox” named the period of time where an individual holds off on filing for bankruptcy as the “sweatbox.” The idea for this nickname is that it is the period of time in which the person is “sweating it off” before taking the leap to file for bankruptcy. The conclusion reached in the study found that the longer a person waited to file for bankruptcy, the more he or she struggled personally and financially.

How long someone waits in the “sweatbox” depends on his or her specific life circumstances.

However, during this period of time when an individual is waiting to file for bankruptcy, he or she is likely facing debt collection proceedings, asset depletion, and the complete inability to pay for basic necessities, such as food and medical care, to avoid filing bankruptcy.

The period of time someone is waiting in the “sweatbox” can range from months to many years.

The law review article took data from the Consumer Bankruptcy Project, which is an academic research project that studies people who file for bankruptcy. The CBP studies the reasons why individuals file, as well as the consequences faced after they file.

The current data available from CBP involves 3,200 bankruptcy cases filed between 2013 and 2016. However, the law review article featured survey information from 910 of the 3,200 included the CBP study.

According to the report, of the 910 individuals surveyed, approximately 66 percent of them were “long strugglers,” meaning they had been living in the “sweatbox” for two or more years. About one-third of those studied waited for five or more years in the “sweatbox.”

The report compared these numbers with those from 2007 CBP data, and the numbers showed that the number of people who were in the long struggling category of waiting for more than five years to file doubled between 2007 and 2016.

The study also showed that the longer people waited, the more likely the following negative consequences would occur, including:

  1. Those debtors struggling while waiting to file ended up with half of the median assets of other debtors who did not wait for two or more years before filing for bankruptcy.
  2. The average debt-to-income ratio of those who were considered long strugglers is 40 percent higher than other debtors.
  3. Approximately 50 percent of those debtors who are were in the “sweatbox” for five or more years faced debt collection lawsuits by the time they actually filed for bankruptcy. In contrast, only 35 percent of other debtors who filed sooner were facing debt collection lawsuits.

Many reported that it is the negative stigma against filing for bankruptcy that keeps people from taking that step towards filing for bankruptcy.

However, certain factors play into whether someone should take that first step in considering bankruptcy.

  1. If the person’s debts are more than 40 percent of his or her income, this can be a good indication that he or she needs to be considering bankruptcy.
  2. If the debtor is using debts to pay for other debts, this action can be a red flag that the debtor is falling deeper into a financial hole.
  3. If the person is paying off debts that could otherwise be liquidated in bankruptcy, a bankruptcy filing may be a better option. Otherwise, the person could essentially be throwing money away by paying a debt that will end up being discharged at the end of the proceedings. These debts include unsecured consumer debts, credit cards, medical bills or unsecured loans.
  4. The person is not able to pay for day-to-day essentials. The study showed that 60 percent of those in the long struggling category were going without medical attention, while 32 percent of them were not able to pay for food.


An experienced Texas bankruptcy lawyer can help you with any questions you may have about how the bankruptcy process can help you receive the debt relief you deserve. Call the Law Office of Marilyn D. Garner at (817) 505-1499 now for a free consultation to discuss how bankruptcy may help you.

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