As an attorney, I have got a duty to watch out for the best interests of my clients. I also have a duty to watch out for the best interests of potential clients, folks who come to me for help but don't really wind up hiring me. That duty infrequently includes advising folks NOT to file a bankruptcy case.
What is the common reason explaining why I turn clients away? It's not because they need to try harder to pay their obligations. It is not because I suspect they're being deceitful. The most common reason which explains why I advise folks not to file for bankruptcy is often because they have zip to protect.
That's infrequently hard for folk to get their heads around. Bankruptcy law doesn't exist to guard people who've nothing; Bankruptcy law exists to guard folks who still have assets. It enables people to save those assets, and avoid losing everything.
I often see a possible client with the following situation: She's being stressed by debt collection agents. Her only income source is social security, or maybe work revenue in a very small amount. She doesn't own a home and doesn't have much money in the bank. Her only debt is medical debt, credit cards, and perhaps some payday loan. She sustained those obligations truthfully, but she's never going to be able to repay them.
Believe it or disbelieve it, this person should not go into bankruptcy.
First, she doesn't need to become bankrupt to stop the telephone calls: Under Fed law (and, for those in California and certain other states, under state law), if she informs her creditors of her inability to pay, they must stop contacting her. If they don't stop, she's got a potential lawsuit against them.
What's more, whether or not the debt collectors sue her (which they could still do), and even though they get court judgments against her, how are they ever going to be able to collect? They can't garnish her wages: Social Security isn't garnishable and her work earnings is below the garnishable amount (which varies from 1 state to another). She doesn't have any money in the bank to levy. She doesn't have a place for them to put a lien against. They can not get blood from a stone. She is judgment-proof.
Alternatively, if she files an insolvency case, she has got to pay a barrister. She might have to pay Court filing fees. Maybe more critical, she cannot be in a position to file again for another 8 years. What if she has got a medical emergency next year and incurs more medical debt?
If her circumstances change, then my recommendation changes. Shall we say she regains full employment. Let's say a relative passes away and leaves her a partial interest in a bit of real estate. Now she has assets to protect. Now she has got a reason to file insolvency. She needs to be well placed to keep those assets so as to enjoy a true fresh start.
You might be in a corresponding situation. Maybe you lost your job, and then after the unemployment insurance ran out, you began using your credit cards to buy groceries and pay bills. Your auto was repo'd, and the lender says that you still owe money to them. Now you finally found work again, but you are sill loaded with those liabilities. You presumed that making a bankruptcy application was for folk at the bottom, not folks on the way back up. That isn't quite right; the bankruptcy laws exist to help folks exactly like you.
What is the common reason explaining why I turn clients away? It's not because they need to try harder to pay their obligations. It is not because I suspect they're being deceitful. The most common reason which explains why I advise folks not to file for bankruptcy is often because they have zip to protect.
That's infrequently hard for folk to get their heads around. Bankruptcy law doesn't exist to guard people who've nothing; Bankruptcy law exists to guard folks who still have assets. It enables people to save those assets, and avoid losing everything.
I often see a possible client with the following situation: She's being stressed by debt collection agents. Her only income source is social security, or maybe work revenue in a very small amount. She doesn't own a home and doesn't have much money in the bank. Her only debt is medical debt, credit cards, and perhaps some payday loan. She sustained those obligations truthfully, but she's never going to be able to repay them.
Believe it or disbelieve it, this person should not go into bankruptcy.
First, she doesn't need to become bankrupt to stop the telephone calls: Under Fed law (and, for those in California and certain other states, under state law), if she informs her creditors of her inability to pay, they must stop contacting her. If they don't stop, she's got a potential lawsuit against them.
What's more, whether or not the debt collectors sue her (which they could still do), and even though they get court judgments against her, how are they ever going to be able to collect? They can't garnish her wages: Social Security isn't garnishable and her work earnings is below the garnishable amount (which varies from 1 state to another). She doesn't have any money in the bank to levy. She doesn't have a place for them to put a lien against. They can not get blood from a stone. She is judgment-proof.
Alternatively, if she files an insolvency case, she has got to pay a barrister. She might have to pay Court filing fees. Maybe more critical, she cannot be in a position to file again for another 8 years. What if she has got a medical emergency next year and incurs more medical debt?
If her circumstances change, then my recommendation changes. Shall we say she regains full employment. Let's say a relative passes away and leaves her a partial interest in a bit of real estate. Now she has assets to protect. Now she has got a reason to file insolvency. She needs to be well placed to keep those assets so as to enjoy a true fresh start.
You might be in a corresponding situation. Maybe you lost your job, and then after the unemployment insurance ran out, you began using your credit cards to buy groceries and pay bills. Your auto was repo'd, and the lender says that you still owe money to them. Now you finally found work again, but you are sill loaded with those liabilities. You presumed that making a bankruptcy application was for folk at the bottom, not folks on the way back up. That isn't quite right; the bankruptcy laws exist to help folks exactly like you.
About the Author:
Peter Taylor is a senior finance analyst for company loan and low rate payday loan in singapore . In recent years he took up to provide independent fiscal guidance through low fee license money lender
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