Thoughts for Those Feeling Guilty
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. He wrote the Declaration of Independence. He was 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, filing bankruptcy is nothing for which to be ashamed. 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 chapter 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