Is Bankruptcy Cheating?
July 21, 2008
Flat out, no. Most of the people who file bankruptcy are in need of real protection from creditors. Nothing makes the credit industry happier than being able to charge hardworking Americans high interest rates. It’s about the easiest way to fatten their bottom line profits. Without the bankruptcy code as a safety valve, we would have massive social and economic upheaval. The bankruptcy code allows Americans like you to get a fresh start and become productive members of society again.
A few noteworthy bankruptcy filers:
Abraham Lincoln, John James Audubon, P.T. Barnum, Kim Basinger, Frank Baum, Buffalo Bill, Raymond Carver, Miguel de Cervantes, Samuel L. Clemens ("Mark Twain"), John Connally, Francis Ford Coppola, Dorothy Dandridge, Daniel Defoe, Walt Disney, Henry Ford, William Fox, Red Foxx, Zsa Zsa Gabor, Marvin Gaye, Charles Goodyear, Ulysses S. Grant, Johannes Gutenberg, M.C. Hammer, George Frideric Handel, Richard Harris, Isaac Hayes, H.J. Heinz, Don Johnson, Larry King, Robert Kiyosaki, Cyndi Lauper, George McGovern, William McKinley, Willie Nelson, Wayne Newton, Tom Petty, Rembrandt, Burt Reynolds, Mickey Rooney, Johnny Unitas, Oscar Wilde….. and on and on the list goes.
You don’t need to be famous to file bankruptcy. Financial crises happen to anyone. But don’t put off the decision to file because you have been shamed into believing that bankruptcy is dishonest or immoral. This is a mistake. The fact that bankruptcy has become an emergency decision for you does not mean your case can be submitted over night. The new law forces debtors to gather a massive amount of data. If you have left yourself a few months to gather the data and pay your bankruptcy attorney in installments, things are much simpler. If you are forced to come up with the entire balance of the legal fees and gather the paper work necessary to file in a week or less, you may end up having to borrow money from friends or family members in order to move forward. The worst case scenario involves emergency cases filed without the aid of an attorney. The only person on your side in the entire process is your lawyer. No one else is required to explain the legal consequences of anything involved in the process.
The credit industry did its best to destroy the bankruptcy system in 2005, but competent judges and lawyers nationwide are carving it out again. When the bankruptcy code was gutted in 2005, the new law was called “Bankruptcy Abuse Prevention and Consumer Protection Act of 2005,” or BAPCA. Nowhere in this document what their a provisions to protect consumers like you. It was a law designed to force individuals and families like yours into Chapter 13 debtor prison. The founders would be sickened by the system.
All is not lost, however. A recent case decided in favor of debtors. No longer will attorneys or debtors be forced to take a retirement distribution into account when determining whether or not a person’s income is too high to file Chapter 7. Too bad for all the cases the US Trustee got dismissed prior to the case being decided, but at least the tide is moving back toward a more reasonable system than was first foisted onto American by international lending institutions in 2005.
The key to the new law is for you to recognize your financial problem early and move forward accordingly. Planning with a competent lawyer to file a case is not illegal, even though some are eager to proclaim such nonsense. Creditors always protect themselves; at some point, those faced with crushing debt must do so as well.
