Seriously, Don’t File Bankruptcy, They Say.
Let’s face it, there’s a ton of reasons why you should not file bankruptcy, and there’s a ton of people telling saying to avoid it at all cost. The excuses given are vast, and many complete non-sense. Most are self-serving to someone other than yourself, and almost all are for benefit of your creditors only. Others are simply the opinions of fools trying to make themselves feel better by convincing you to continue an impossible struggle. If you’re in a position where protection under the federal bankruptcy laws is appropriate, let me assure you, your creditors will be the last to let you know. Others will try to make money off of your misery and take advantage of you, telling you that “you don’t want to hire a lawyer”. Bankruptcy laws protect you, not them, and so they urge you not to file.
This article focuses on some of the more common myths, misconceptions, and downright lies told to my clients over the years about why they should not or cannot file for bankruptcy relief. While of course there are reasons why you should avoid filing, or at least avoid filing at this time, those reasons may surprise you.
Why Not to File Bankruptcy
1. You’ll Never Get Credit Again After a Bankruptcy
This is ridiculous! “Do not file bankruptcy, you will never get credit again”. In part, that’s the point of filing bankruptcy, to begin with, to get back on your feet so you can establish good credit. While the internet is full of articles on establishing and keeping good credit after a bankruptcy, suffice it to say, it’s going to take a bit of time to do so, but yes, you will have good credit again.
2. You’ll Get Fired from Your Job.
While I cannot say with absolute certainty that there’s not an employer out there who takes such action, I can honestly say that in my years helping people through the bankruptcy process, I’ve never heard of that situation. In fact, many employers would rather hire someone who corrected their bad financial situation, rather than someone who is still struggling and in dire need of money. If you work in the financial industry, or investments, yes, you should check with your state regulatory board or equivalent to make sure such a filing won’t impact your job, but in the vast majority of cases, it makes very little difference, and has absolutely no impact on employment.
3. Do Not File Bankruptcy, Only Losers File for Bankruptcy
Now this one really ticks me off. My clients file for bankruptcy protection because they want to better their lives, they want to build a future, to protect their family, to grow financially, and to rebuild what they so desperately miss financial freedom. Losers do not care about the future, about providing for their family, about having financial stability, losers don’t care, period! My clients do, and that’s why they are utilizing what federal law allows them to. No different than the wealthy utilize the tax code, various trust mechanisms, wealth sheltering devices, and investments authorized by federal law, my clients want a better financial future. Losers on the other hand don’t care.
4. My Daddy Taught Me “A Man Pulls Himself up by His Own Bootstraps”
Hey, I get it, I try to follow valued and sage wisdom as well. Unless Dad’s going to financially be there to help you dig out of this hole, Dad’s advice is only as good as the memory of when he said it. This notion that “a man pulls himself up by his own bootstraps” is nonsense, if you don’t acknowledge that part of that “pulling yourself up” is by using the “bootstrap” available. Bankruptcy is that bootstrap. Advice from others is great, help from others is even better and when the only help offered is to stay suffering, then that advice is simply an impediment to the goal. Your creditors all love those who are telling you never to file bankruptcy, especially those credit cards charging 30% interest. They think such advice is genius!
5. You Could Be Charged with a Crime
Absolute and total B.S.! If you are told such, please give me a call. I’d very much like to know who said that because if it’s a creditor, that statement is probably actionable.
6. You Can’t File for Bankruptcy Relief Because of the New Law
The Bankruptcy Code vastly changed in 2005 when congress enacted the “Bankruptcy Abuse Prevention and Consumer Protection Act: or “BAPCPA” as it’s referred to. This new law attempted to prohibit some of the abuses that used to take place prior to the enactment. Ask yourself this: “Are you abusing the process?”
7. You Lose All Your Stuff if You File Bankruptcy
No! No, you will not. See my writing about exemptions. When you file for bankruptcy protection, you are allowed to keep a certain amount of assets, these are called exemptions. For example, you are allowed to keep a certain amount of equity in a vehicle. At this time, that amount is $3,000 per debtor. What this means is that if you own a $10,000 car, and you still owe $7,000, you then have $3000 in equity, you may keep that car. There are “exemptions” for everything from houses to wedding rings. You will not lose all of your stuff.
O’Fallon, MO 63366