Honest, Hard-Working People Experience Bankruptcy
Why would someone do the most unimaginable and extreme act of“filing for bankruptcy?” If anybody tells you that people who file bankruptcy are seeking an easy way out of their debt situation, don’t believe them! It has been my experience that filing bankruptcy is not the result of my clients’ conscious intent to avoid their financial responsibilities. By the time they get to my office, they have walked a very long, hard and painful road, mostly in silence. Their creditors’ actions are the main reason they seek bankruptcy advice. It isn’t greed or an attempt to get something for nothing, but it’s their creditors’ “extreme collection activities” which causes them to seek bankruptcy protection.
By the time a person files for bankruptcy, they have tried many different ways to resolve their debt with the creditors and are simply trapped in a “callejon sin salida” or deadend alley. They have tried a way out by approaching debt resolution companies, often finding that those companies keep the first 10 months payments for their fees. So, by the time they make their 8thpayment, a lawsuit is filed by one of the
creditors and the clients are left out in the cold to fend for themselves. Others try debt consolidation agencies but they are so deep in debt that the interest deductions negotiated by the agencies for their accounts aren’t sufficient enough to lower their monthly payments to a more manageable level.
Additionally, secured creditors, like mortgage companies or car financing creditors almost always refuse to renegotiate arrears with credit counseling agencies. Still others will withdraw or borrow against their 401K accounts or other retirement accounts to settle part of their debts. Those people manage to get deeper into debt, especially the IRS penalties and taxes for withdrawing retirement money early. Yet, despite paying or settling with some of their creditors, they end up getting sued by the remaining creditors. Still, others attempt to settle accounts on their own—one at a time. Saving and saving over time to put together a $500 or $1,500 settlement offer for one card company or another, yet
seeing no end in sight for the remaining debts. Eventually, they give up saving and settling because one or more of the remaining creditors file a case at the courthouse against them.
People who owe money to creditors, including the ones who are very delinquent, still value their word to payoff their debts. They hope that someday they can payoff their debts and keep their credit cards with more manageable credit. Unfortunately, these people with delinquent accounts are driven to bankruptcy by what many perceive as creditor’s abusive tactics. These clients have suffered these
humiliating collection activities in silence and self-placed shame. They endure a daily dosage of telephone or cell phone collection calls from a collection agents to their home or work place.
Usually, these callers interrupt a quiet time at home with their significant other while people are watching their favorite television shows or movies; or they may be enjoying a quiet dinner at home; or taking part in a family gathering with siblings, parents or other relatives, who may or may not be aware of their financial strains. Its painful to be constantly reminded of their debts with these incessant calls. At the work place, they often ask co-workers to cover those collection calls for them to avoid speaking with those collection agents, in fear that the boss would find out and dismiss them for having too much personal issues! Aside the issue of whether those calls are legal or illegal, debtors don’t have the ability to stop the harassment by advising those collectors that they are violating the law when they use some of those tactics. The debtors just endure and make promises to pay to get rid of the callers, but which leads to just more phone calls. Collectors have been known to claim they can take someone’s paycheck away or be able to get a sheriff or police officer to issue an arrest warrant. Others call neighbors, friends and
relatives requesting to know how to get a hold of the debtor because he or she is late on their payments.
Filing bankruptcy is not a debtor’s first choice or “easy out” of their debt situation. It is often done as a
last resort, and probably the “hardest” decision they had to make in their lives. The same people that had stellar credit ratings a year before, are now considered the highest risk to those same credit companies. Still, most got there for something that happened in their lives for which they had no fault of their own. A wife or husband decides to leave the marital home for whatever reason, leaving the spouse with a one income household; or a wife or husband falling seriously ill and they are unable to maintain a full time employment and thus leaves the family to maintain the whole household with only one income.
In these most troubling economic times, caused by the same banks that issue those credit cards, one or both of the spouses loose their high paying jobs temporarily and have to rely on unemployment benefits to survive. Others , loose their spouse more permanently because of illness leaving them with all the medical bills and a household to take care off on their own. No matter what anyone tells you, don’t believe that a person who files for bankruptcy is doing it as an easy way to avoid his financial obligations to creditors.
When you find yourself in economic distress for any of the reasons mentioned in this blog, feel assured that Jose Soria, a San Antonio Bankruptcy Attorney, will listen and recommend the best course of action for you.