If you listen to some of the “debt gurus” out there who discourage everyone from filing bankruptcy and encourage them to instead work harder to repay debts, then you’ve probably taken on extra work to repay debt only to find that you still can’t make it out of the debt hole.  If that’s you, there are some realities you need to consider:

Working extra hours or an extra job is not a sliver bullet for repaying out of control debt.  Every extra hour you work in an effort to avoid bankruptcy and repay debt has a real (and additional) cost associated with it: extra childcare payments, commuting costs, costs in mental well-being and often medical costs due to extra stress put on the body.

Working “more” in order to avoid bankruptcy does not always make sense economically after you deduct the additional costs listed above (and that’s not including income taxes paid on the additional income).

Working “more” in an effort to avoid bankruptcy is not always sustainable.  If you’re just working more to pay off a $1,000 debt and are in otherwise good financial shape, by all means please go for it.  However, if you are working more to pay off tens of thousands of dollars in debt, working more instead of filing bankruptcy may not be feasible.  Ask yourself, how long will it take me to pay off this debt by working 60 – 80 hours per week? If your answer is measured in years as opposed to months or weeks, you probably should consider bankruptcy.

Finally, once you file bankruptcy, those extra hours may artificially inflate your income, since the means test counts income in the past six months before filing bankruptcy.  If you’ve worked an extra job or additional hours you may want to consider waiting until after you’ve returned to your regular/reduced work schedule before filing bankruptcy.

Source: Bankruptcy Law Network

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