Filing Bankruptcy: Some thoughts for those who feel guilty or ashamed and want to wait.
Filing bankruptcy or deciding to file bankruptcy is a very serious decision and should only be done when it is absolutely necessary. In my experience, however, due to human nature, general fear, moral apprehension, and yes, guilt and shame, the vast majority of people wait too long to at least seek input from a bankruptcy professional about whether filing is in their best interest. By waiting too long, consequences can be as small as paying thousands of dollars to your creditors unnecessarily (well, that's not small, but compared to other problems that occur, it is) or as large as rendering yourself completely ineligible to file because of actions you took, or didn't take, ahead of time. Under the new bankruptcy laws that went into effect in 2005, pre-bankruptcy planning is even more important than ever before.
First of all, in most cases, what led you here
IS NOT YOUR FAULT. Please believe that I understand this. Don't confuse this for meaning that I advocate being irresponsible with your finances. That's not what I'm saying. But if you got to this point because of a job loss, or unexpected medical bills, or changes in credit card interest rates, or any other unforeseen set of circumstances, that is the very reason bankruptcy laws exist! Do not let shame or guilt get in the way of you solving your problems and moving forward with your life. Guilt and shame accomplish nothing for you or anybody else.
There is no shame in seeking bankruptcy relief and protection. The only shame is waiting too long.
If you're still not convinced, consider this:
Thomas
Jefferson. The third president of the United States. A statesman,
diplomat, architect, author, inventor and farmer. Widely acknowledged
as a genius and the smartest of all United States presidents. A man who gave
vision to this country as one of its founding forefathers and leader of
this country.
Why do I bring up Mr. Jefferson? Because he was
almost constantly in debt. Big debt. Mr. Jefferson filed several
bankruptcies in his lifetime; and, his debt was huge in comparison to
most individuals' bankruptcies today.
The point is, bankruptcy
is nothing to be ashamed of. If a person with Mr. Jefferson's
credentials, aptitude and intelligence can repeatedly get himself into
situations that require bankruptcy to solve, then it is certainly no
negative reflection on you if you need to.
The bankruptcy laws
are there for a reason. On the whole, they benefit both the debtors and
creditors. It is of course important to be responsible for the debts
you incur, but filing a bankruptcy is an act of responsibility. It puts
you in a position to move forward, to become productive once again,
provides closure, and pays your creditors from your non-exempt assets
(or by other means if the court so approves in a Chapter 13 or 11
context).
It is important to seriously explore bankruptcy as an
alternative to struggling for years to no avail. There are many factors
to consider before filing a bankruptcy, but one of them should not be a
guilty conscience.
(With thanks and fondest memories
to the late Steven E. Smith, Trustee, who came up with the idea of
using this story as a prelude to his debtor's examinations).
And
for those who feel guilty about discharging your credit card debts in
bankruptcy, a recent editorial from a Vermont Congressman:
Published on 12/1/2004 in the North Jersey Record
The Great Credit Card Scam
by Bernie Sanders
TODAY'S
LOAN SHARKS are no longer lurking on street corners or hiding in
alleys, breaking knee caps to collect their payments. They now wine and
dine with the president and other powerful political leaders, wear
Armani suits, make hundreds of millions in total compensation and head
banks like Citigroup, MBNA and Capital One. The old-fashioned loan
shark was a common criminal who broke the law. The modern loan shark,
through campaign contributions and political connections, writes the
law.
At a time when interest rates have been historically low,
credit card issuers made a record breaking $30 billion in profits last
year by charging usurious interest rates and sky-high fees. Millions of
financially strapped credit card holders are now being forced to pay 15
percent to 30 percent interest rates and hundreds of dollars a year on
late fees and other add-ons. Like the loan sharks of old, credit card
companies lie, deceive and destroy lives in the process.
Meanwhile,
as credit card issuers rip off middle-class Americans through deceptive
and unfair tactics, the CEOs are laughing all the way to their banks.
Over the last five years, the CEO of Citigroup (Sanford Weill) made
more than $500 million in total compensation and the CEO of Capital One
(Richard Fairbank) made more than $169 million in total compensation.
In 2002 alone, the top four executives at credit card giant MBNA made
more than $300 million in total compensation.
One of the most
egregious ways that these modern-day corporate loan sharks make their
bloated profits is through the credit card interest rate "bait and
switch." Just check your mailbox today and you'll probably find one of
the 5 billion credit card solicitations (the actual figure) that the
companies bombard consumers with every year. What you'll see on these
advertisements in bold print are attractive offers promising low
interest rates of 4 percent, 6 percent or sometimes even zero percent.
That's the bait. But, what you probably won't notice is that in the
very fine print at the bottom of a multi-page contract written in
undecipherable legalese is language that essentially allows the company
to raise their rates at any time for any reason. That's the switch.
The
reality is that many thousands of Americans are now paying interest
rates double or triple than what they signed up for. While short-term
interest rates set by the Federal Reserve Board are now 2 percent, many
credit card holders are paying interest as high as 25 percent to 30
percent.
Most egregiously, interest rates are soaring for
consumers even when they fulfill their end of the contract and make all
their monthly payments on time. How does this happen? Maybe you were
one day late paying a student loan three years before you obtained your
credit card. Maybe you bought a new home. Maybe you committed the crime
of taking out a loan to pay for a medical emergency. Or maybe you did
nothing at all. It doesn't matter.
Even if you have always paid
all of your bills on time, the credit card issuer can still raise your
interest rates at any time for any reason. Unlike fixed mortgage rates,
there is no such thing as a fixed credit card interest rate that you
can depend upon. Further, there have been outrageous increases in late
fees that have cost consumers billions of dollars.
Last year,
Congress had the opportunity to support a bill that would end this
"bait and switch" scam once and for all. Unfortunately, the banks and
credit card companies, with their millions in campaign contributions,
constitute one of the most powerful lobbies on Capitol Hill and were
able to prevent any serious legislation on this issue from being
passed. But consumers and their representatives in Washington must not
give up.
The middle-class of this country is struggling hard to
keep their heads above water economically. Unemployment is high, good
paying jobs and pensions are disappearing, and health care and college
education are becoming much more expensive. The simple truth is that in
order to survive many families are forced to borrow. The result is that
U.S. consumers are now $2 trillion in debt and a record- breaking 1.6
million families went bankrupt last year, an increase of more than 125
percent since 1989.
Loan-sharking is an odious practice whether
it is performed by street corner thugs or the CEOs of large banks.
Charging economically vulnerable Americans outrageous interest rates
and fees is simply not acceptable and, amid all of the recent political
discussion over "values," this certainly does not constitute "moral"
behavior. The time is long overdue for Congress and the White House to
stand up for American consumers, take on the modern-day loan sharks and
end the credit card "bait and switch" scam.
Thinking of filing a bankruptcy and need more
information? Click here to contact Mark J. Markus, an experienced
bankruptcy attorney in Los Angeles, Orange county, Ventura county,
Riverside, California or Call Now (818) 509-1173
