Don't Do It! - Do Not to File Bankruptcy

Let’s face it, there’s a ton of reasons why you should not file bankruptcy, and there’s a ton of people telling why you should avoid it at all cost.  The excuses given are vast, and many complete non-sense.  Most are self serving to someone besides yourself, and almost all are for benefit of your creditor’s exclusively.  Other are simply the opinions of fools trying to make themselves feel better by convincing you to continue a useless 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.  Other will try to make money off of your misery, and take advantage of you, all telling you that “you don’t want to hire a lawyer”.  Bankruptcy laws protect you, not them.  And so they urge you, do not file bankruptcy.

This article focuses on some of the more common myths, misconceptions, and downright lies told to my clients over they years about why the should not, or cannot file for bankruptcy relief.  While of course there are reason why you should avoid filing, or at least avoid filing at this time, those reasons may surprise you.

Why Not to File Bankruptcy

The Myths:

1.  You’ll Never Get Credit Again After A Bankruptcy

This is ridiculous!  “Do not file bankruptcy, you will get credit again”.  In part, that’s the point of bankruptcy to begin with, to get back on your feet so you can establish good credit.  While the internet is chalk 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.  For more information, click here.

2.  You’ll Get Fired From Your Job.

While I cannot say with absolute certainty that there’s not an employer out there who take 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, if make 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 that 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 always Taught Me “A Man Pays His Bills”

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” of Federal Law.  Advice from others is great, help from others is even better and when the only help is to not do what is needed, and what will make the situation better, then that sage wisdom 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 Dad’s a genius!

5.  You Could Be Charged With a Crime

Absolute and total B.S.!  Enough said!  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 illegal.

6.  You Can 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 use 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 won't.  See my writing about exemptions.  When you file for bankruptcy protection, you are allowed to keep a 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.