You have mounting credit card and other unsecured debts, but you are on a fixed income of social security or pensions.

Surprise! You might not need to file bankruptcy at all!

It will take some discipline, some planning, and your willingness to not use traditional sources of credit for future purchases – but it can be done.

I consult with potential clients who often have only exempt assets (creditors cannot touch these possessions) and their income is social security and/or pension. Their income cannot be touched either – social security and pensions are exempt from your creditors attachment.

But here is the catch… You can’t just sit back and do nothing because you are exempt.

If you get sued by a creditor, you have to file an affidavit of exemption with the court where any lawsuit is filed.

You cannot combine other money with your social security or pension money that may be in bank accounts. Better still, you should name your bank accounts by the nature of the money in the account. Like “Lewis Roberts Social Security Account”. Or, “Lewis Roberts Pension Account”. Sort of hard for a creditor to claim they didn’t know the nature of the funds in the account, right?

Also, you need to do something to prevent the countless calls you will receive from creditors once you decide to stop paying your unsecured debts. Under Florida Consumer Laws and the Fair Debt Collection Practices Act, if you tell a creditor or bill collector to stop calling you, they must stop.If you tell them you have hired an attorney, they are not allowed to contact you again. Or, are you prepared to change your phone number?

The last, and maybe the most important consideration, is your need for credit in the future. Once you burn down the bridge towards non-payment of your debts, your credit score will show the effects of that non-payment. Are you prepared to not apply for a mortgage? Pay cash for a car? Be able to survive a credit check if you will be renting a home or apartment?

You may be surprised by how much we use credit scores as a crutch for possessions we want, and feel we need. You may be even more surprised in how little you need “good credit” to obtain the possessions and necessities of life you need to live comfortably.

This strategy is not one size fits all. It is a small percentage of potential clients that I ever recommend not filing bankruptcy and not paying debts – all because there is nothing creditors will ever be able to take.

You have to be confident that you will never own assets that aren’t exempt, you will never inherit assets, or you won’t receive income that creditors might be able to garnish.

Are you disciplined enough to follow this path? Or would the comfort of cleaning up your debt issues in bankruptcy be a better option?