The biggest hurdle I face in my area of legal practice is this: Helping people come to the realization that they shouldn’t feel guilty about filing a case with the Bankruptcy Court.
I never use the phrases “declare bankruptcy” or “go bankrupt.” What I do is help my clients file a very specific kind of legal case and take advantage of very specific legal tools that exist to help them. And those kinds of cases happen to be heard by the Bankruptcy Court. There is no moral judgment in filing such a case. It doesn’t mean that you’ve failed somehow. All it means is that you need protection from the Court while you restructure your debts.
Not to be overly melodramatic, but modern America has in many ways become a system for extracting wealth from ordinary, hard-working people. The clients and potential clients I meet every day each have their own unique situations, but in one respect they are similar: they’ve found themselves in a financial situation that’s not entirely of their making. Maybe they’ve fallen behind on their mortgage after one spouse gets sick or loses her job. Maybe they put their retirement money into an investment property that has plummeted in value. Maybe in a time of desperation they took out an exorbitant title loan on their car. Maybe they’ve been trying to make payments to keep debt collectors at bay, but their salary just doesn’t go as far as it used to.
The individual doesn’t have too many weapons in such situations. Trying to fight them in the civil courts is expensive and often fruitless. Debt consolidators do little else but take your money. The big banks string you along with their promises of loan modifications, but in the end wind up foreclosing anyway.
The Bankruptcy Court is one of the very few places where an individual can go to get real, fast, and relatively inexpensive relief that carries the full force of law. When you file a case, the Court issues an Order telling your creditors they can’t try to collect from you. When your case closes, it issues another Order telling certain of your creditors that you don’t owe them anything else. Creditors take those Orders VERY seriously.
Big companies don’t get caught up with some kind of moral compunction about using the legal tools available to them. For them, filing a bankruptcy case is ultimately a numbers-based decision, and it should be for you too. Big companies know that after they emerge from bankruptcy, they will actually be more credit-worthy. Big companies know that they stand to be far more successful in a future free from bad debt.
Don’t listen to your creditors; they are not your friends. Of course they don’t want you to file. They’ve helped create a whole culture that makes you worry about your credit score and feel guilty about taking advantage of the legal system’s tools. Take your own counsel and decide what is best for you.