When Is Doing Nothing A Possible Bankruptcy Strategy?

When Might Ignoring Your Debts Be A Viable Bankruptcy Strategy?

In certain financial circumstances, you might find yourself with mounting debts and insurmountable monthly payments. Your income could be limited or nonexistent, making bankruptcy seem like the only option. However, is there a strategy where you do nothing, effectively ignoring your debts? Let’s explore when ignoring your debts could be a viable bankruptcy strategy.

Understanding ‘Creditor Proof’ Status

The primary goal of filing for bankruptcy is to get rid of your debts, putting a halt to the relentless calls from creditors. Nonetheless, if you’re incapable of repaying your debts, you might be regarded as ‘creditor proof’. This implies that although creditors may continue to demand payments, their methods of pursuing you are limited.

When Ignoring Your Debts Might Be A Strategy

You might consider ignoring your debts as a strategy in the following circumstances:


  • You have no income or assets.
    In such a case, your creditors wouldn’t be able to garnish your wages. This could be if you’re unemployed or retired with a modest pension. Attaching pension income isn’t a straightforward task for creditors.

However, this strategy has a significant drawback — you must be able to withstand the continuous phone calls from creditors and collection agencies. They will likely persist in their attempts to contact you, hoping for a change in your financial condition or to persuade you into making some form of payment.

The Aftermath of Ignoring Your Debts

Choosing to ignore your debts rather than filing for bankruptcy has its repercussions. For starters, your creditors will likely continue to contact you. If you start working again, they might initiate proceedings to garnish your wages.

Moreover, your credit card and other debts won’t just disappear. If you’re only making the minimum monthly payments, it could take years to clear your debt. And if you’re behind on your payments, you might never catch up.

Ignoring your debts and ceasing payments on your home, car or other secured loans could result in your creditors exhausting every avenue to collect, including repossession and foreclosure. Even without an income, bankruptcy can assist you in managing these consequences, provided you have some income to make the required monthly payments for 9 months (assuming this is your first bankruptcy).

A Temporary Solution

There might be instances when ignoring your debts serves as a temporary solution. This could be while you’re job hunting or waiting for a change in your financial situation. The most prudent approach would be to inform your creditors that you’re not earning any income and are unable to make payments. Once you secure a job, reach out to a bankruptcy trustee to discuss your options to handle your accumulated debt, allowing you to return to work with the assurance that your financial situation will improve.

Bankruptcy or Do Nothing

In conclusion, while ignoring your debts might seem like a viable strategy in certain circumstances, it’s crucial to be aware of the potential repercussions. It’s always recommended to seek professional advice to understand the best course of action for your specific financial situation.

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