Editor’s note: Bankruptcy Lawyer Mark C. Schnitzer was profiled by The San Bernardino County Sun this week on the rise in bankruptcy filings in the Inland Empire.

As a bankruptcy attorney in Riverside and San Bernardino, California, I often find that many of my potential bankruptcy clients inform me that they are weighing their options between debt consolidation and filing chapter 7 or 13 bankruptcy. There are several factors that should be considered.

First, it is of utmost importance that you investigate the debt consolidator that you are dealing with. Many use unscrupulous practices and will cost you far more than simply negotiating your debt yourself. The idea that one payment is magically easier than multiple payments to multiple creditors is simply not true. California bankruptcy attorneys are regulated by the California State Bar as well as by the Federal courts, a indicator of trust to many that bankruptcy law firms must abide by tough ethical standards.

Second, be very wary of any debt consolidation that turns an unsecured loan, like a credit card, into a secured loan, such as a home equity line of credit. Choosing this route will only further drive you into debt and although you may be able to wipe out the debt, the lien may remain on your home. This is particularly an issue if your finances get worse, as bankruptcy might not be able to wipe out your second mortgage lien, though it could have easily eliminated your credit card debt had you not consolidated your unsecured loan into a secured loan.

Third, you need to be honest with yourself about your financial situation. Debt consolidation may not eliminate the debt, which may be the only way out of your financial plight if you have taken on too much debt and have little income. These tough economic times have revealed high levels of prolonged unemployment. I would encourage individuals to think long and hard what options they will have if their unemployment is prolonged, or if their unemployment benefits and savings run out.

Often times, the only viable option is bankruptcy, though there are scenarios where an aggressive payoff schedule at a lower interest rate may allow a debtor to realistically resolve the situation. Debtors are best advised to sit down for an initial consultation with an experienced bankruptcy lawyer to weigh their options before they make a mistake that cannot be undone.

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About Mark C. Schnitzer

Mark C. Schnitzer is a Senior Attorney with the Riverside law firm of Reid & Hellyer. A bankruptcy attorney serving San Bernardino and Riverside, he is the founding president of the Inland Empire Chapter of the Federal Bar Association and is a member of the American Bankruptcy Institute. He served on the board of directors for the Inland Empire Bankruptcy Forum from 1992 to 2007 and served on the board of directors for the California Bankruptcy Forum from 1993 to 1998.

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About Scott Talkov

Scott Talkov joined the Riverside law firm of Reid & Hellyer in August 2009 after serving as a Summer Law Clerk with the firm in 2008. He practices real estate and business litigation and serves on the board of directors for the Riverside County Barristers Association, the club for young attorneys in Riverside County. Scott graduated cum laude from Washington University in St. Louis School of Law and is the founding Director of the Associated Students Legal Clinic at University of California, Riverside.

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