PLANNING FOR THE WORST

Bankruptcy Update: Planning for the Worst

Many people live their lives too optimistically for my taste.  As an attorney, I have become very risk adverse.  Instead of thinking of how things will go well, I am always worried about how things can go wrong.  Don’t get me wrong – optimism is GREAT!  But if you are too optimistic, you will ignore dangers and walk right into them. 

This comes up in my bankruptcy practice all too often.  My clients will wait long past financial distress, and wait until financial Armageddon before they ask a professional what they should be doing.   This severely limits their options. 

I want to take a little time to explain some things all people should do or not do – especially if they are having difficulty meeting their financial burdens.

1.      Meet with a professional!:  This is not merely self-serving.  You can meet with accountants, investment advisers, or attorneys.  Professional guidance at every step of financial health will improve your ability to avoid dangers. 

2.      Retirement accounts:  Everyone knows that having money for retirement is a good idea.  Less well known is that they are protected from creditors in and out of bankruptcy.  This is a good safe-haven for your assets in the event you are hounded by creditors.

3.      Know who to pay:  Some people freeze up when they cannot pay everyone – so they pay no one.  If you get to this point you should go back to number 1 before you start pulling money from your retirement or borrowing from friends or family. 

4.      Personal loans:  If you are going to lend money to a friend of family member or they are going to loan money to you, consider securing the loan.  This helps ensure payment to these parties in the face of collection from other creditors. 

5.      Create Trusts:  If you decide you want to help family members in this life or after, you should consider placing those funds into a trust.  You can set up a trust in a way to allow those family members to receive the benefits of the trust without impairing their ability to obtain Supplemental Social Security or Medicaid.  You can also protect those trust assets from their creditors!

6.      Disability Plan:  Plan on how you will live should you become disabled.  You should at least have short-term and long-term disability insurance. 

I know – this is an eclectic list of points.  They all have one thing in common, better safe than sorry.  Keep these in mind when times are good, and your bad times will not be quite as bad.  Don’t be the one to later say, “I never thought it would happen to me.”

If you or someone you know has a toxic property, they should consult with a qualified professional that can explore all that property owner’s options to best resolve their issue.

Martin Prybylski

Attorney at Law

McFerran Law, P.S.

3906 S 74^th Street

Tacoma, WA 98409

253-284-3811