As an attorney, I have got a duty to look out for the best interests of my clients. I even have a duty to keep an eye out for the best interests of potential customers, folk who come to me for help but don't basically wind up hiring me. That duty infrequently includes advising folks NOT to file an insolvency case.
What is the usual reason explaining why I turn clients away? It's not because they have to try hard to pay their obligations. It isn't because I believe they are being deceitful. The most typical reason why I counsel people not to become bankrupt is often because they have nothing to protect.
That is sometimes hard for people to get their heads around. Insolvency law doesn't exist to guard folks who have nothing; Bankruptcy law exists to protect people who still have assets. It enables people to save those assets, and avoid losing everything.
I frequently see a possible customer with the following situation: She is being harassed by debt recovery operatives. Her only income source is social security, or perhaps employment income in a very small amount. She does not own a house and does not have much money in the bank. Her only debt is medical debt, credit cards, and perhaps some payday loan. She sustained those debt honestly, but she is not going to be able to repay them.
Believe it or not, this person should not file for bankruptcy.
First, she doesn't need to go into bankruptcy to stop the phone calls: Under Fed. law (and, for those in California and certain other states, under state law), if she informs her creditors of her incapability to pay, they must stop contacting her. If they don't stop, she has a potential court action against them.
What's more, whether or not the debt collectors sue her (which they could still do), and even if they get court judgments against her, how are they ever going to be well placed 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 one state to another). She hasn't got any money in the bank to levy. She doesn't have a home for them to put a lien against. They can't get blood from a stone. She is judgment-proof.
From another perspective, if she files a bankruptcy case, she has got to pay a barrister. She might have to pay Court filing fees. Perhaps more critical, she won't 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. Let's assume she regains full work. Shall we say a relative passes away and leaves her a partial interest in a piece of property. Now she has assets to guard. Now she has a reason to file bankruptcy. She needs to be in a position to keep those assets in order to enjoy a true new beginning.
You could be in a corresponding situation. Maybe you lost your job, and then after the unemployment insurance ran out, you started using your mastercards to buy groceries and pay bills. Your car was repo'd, and the lender says you still owe money to them. Now you finally found work again, but you are sill saddled with those debts. You presumed that making a bankruptcy application was for folks at the bottom, not people on the way back up. That's not quite right; the bankruptcy laws exist to help folks exactly like you.
What is the usual reason explaining why I turn clients away? It's not because they have to try hard to pay their obligations. It isn't because I believe they are being deceitful. The most typical reason why I counsel people not to become bankrupt is often because they have nothing to protect.
That is sometimes hard for people to get their heads around. Insolvency law doesn't exist to guard folks who have nothing; Bankruptcy law exists to protect people who still have assets. It enables people to save those assets, and avoid losing everything.
I frequently see a possible customer with the following situation: She is being harassed by debt recovery operatives. Her only income source is social security, or perhaps employment income in a very small amount. She does not own a house and does not have much money in the bank. Her only debt is medical debt, credit cards, and perhaps some payday loan. She sustained those debt honestly, but she is not going to be able to repay them.
Believe it or not, this person should not file for bankruptcy.
First, she doesn't need to go into bankruptcy to stop the phone calls: Under Fed. law (and, for those in California and certain other states, under state law), if she informs her creditors of her incapability to pay, they must stop contacting her. If they don't stop, she has a potential court action against them.
What's more, whether or not the debt collectors sue her (which they could still do), and even if they get court judgments against her, how are they ever going to be well placed 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 one state to another). She hasn't got any money in the bank to levy. She doesn't have a home for them to put a lien against. They can't get blood from a stone. She is judgment-proof.
From another perspective, if she files a bankruptcy case, she has got to pay a barrister. She might have to pay Court filing fees. Perhaps more critical, she won't 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. Let's assume she regains full work. Shall we say a relative passes away and leaves her a partial interest in a piece of property. Now she has assets to guard. Now she has a reason to file bankruptcy. She needs to be in a position to keep those assets in order to enjoy a true new beginning.
You could be in a corresponding situation. Maybe you lost your job, and then after the unemployment insurance ran out, you started using your mastercards to buy groceries and pay bills. Your car was repo'd, and the lender says you still owe money to them. Now you finally found work again, but you are sill saddled with those debts. You presumed that making a bankruptcy application was for folks at the bottom, not people on the way back up. That's not 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 affordable business loan in singapore . In recent years he took up to provide independent fiscal guidance through low rate licensed money lender
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