For most of my clients, the hardest, most stress-ridden part of the bankruptcy process is picking up the phone and calling my office. This is because coming to the realization that a bankruptcy may be necessary is a very difficult pill to swallow for many individuals. Just the mere thought of the dreaded “B word” causes a lot of people to become anxious and uneasy. There are many reasons for this reaction, some that are very well warranted and others that probably are not. Below are some of the common reactions that I get from my clients at either our initial meeting or phone conversation, and my thoughts regarding those reactions:
1) “I’m Just Really Scared.” – This is a very natural reaction and one that I think is totally warranted. Filing a bankruptcy is scary for people because of the unknown. They don’t understand it, and the general public certainly doesn’t understand bankruptcy. The only way to alleviate this fear is to pick up the phone and contact an attorney who does understand bankruptcy. Most of the time, the fears are easily laid to rest. Just knowing the answers to the questions can usually do that. Much of the time, and certainly at my office, the initial meeting is FREE. So, there is really nothing to lose.
2) “I feel like a failure.” – Most of the time, this is not the case at all. Despite the perception among some in the public who believe that only irresponsible, ill-meaning people file for bankruptcy, my experience is quite the opposite. I have yet to meet someone who was happy about the fact that they had to file for bankruptcy. The vast majority of the time, a bankruptcy is the end financial result of serious illness, divorce, or job loss. There is no reason for anyone to feel like a failure because they got ill, lost income, had to support their family and got into debt as a result.
3) “I have heard so many horror stories about people losing everything they have.” – This is probably the biggest myth about bankruptcy. Bankruptcy is generally not the catalyst for losing assets. In fact, the reason that many people file for bankruptcy is TO PROTECT their assets. The horror stories that you hear are generally incomplete and not the whole truth. A good lawyer can tell you exactly what assets are at risk (if any) BEFORE you file, and then you can make an informed decision as to whether to file the bankruptcy or not. The fact of the matter is that the bankruptcy laws allow you to protect A LOT of assets. It’s rare that I meet with an individual who has more assets than the bankruptcy laws allow you to protect.
4) “I heard that I will never get credit again.” – Nonsense. Often times a bankruptcy is the very best thing that can happen to someone for credit purposes. Most of the time, when I meet with someone, their credit is already completely destroyed with no possible repair in sight. After a bankruptcy, instead of having thousands of dollars of delinquent debt, an individual often has NO debt. If I am a lender, the person with zero debt is much more attractive than a person with a lot of delinquent debt. It is also the common practice of many banks to offer credit cards and car loans to individuals who have filed for bankruptcy immediately after the bankruptcy is over. After all, the banks make money by lending money. They want as many people to borrow from them as they can. Even those who just filed for bankruptcy.
There is a common theme among all of these reactions to bankruptcy that I detailed above. The theme is that most of the very common, very natural fears related to bankruptcy can easily be addressed by an attorney who is experienced in handling bankruptcy matters. As I stated above, picking up the phone to make that initial call is often the most difficult part of the bankruptcy process. However, once a knowledgeable attorney is involved, questions get answered, fears become quelled, and there is usually a palpable sense of relief. Bankruptcy isn’t the answer for everyone. But by picking up the phone and making a call, you can find out if bankruptcy is the answer for you.