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Bankruptcy vs. Living with Debt

20 July 2012

As a bankruptcy attorney, it is an ongoing source of frustration for me that any TV or radio call in dealing with financial topics will refuse to mention the word “bankruptcy”, even if the person calling in is crippled by debt they will never be able to repay.  financial newsThis is absurd.  It isn’t as though they can pretend it’s not happening and it will go away.  More than a million bankruptcies are filed every year.  Even in my small Northern Kentucky community, 3,000 to 4,000 cases are filed every year.  We may not like to talk about debt or bankruptcy, but that doesn’t mean it isn’t here and isn’t having an impact.  It benefits no one for families to be incapacitated by debt when bankruptcy would provide relief.

Bankruptcy isn’t a solution for everyone, but it exists to benefit the national economy far more than to benefit individuals or families.  How?  Directly, by freeing up money that is going toward finance charges and late fees and using it for the consumer spending that keeps people employed.  When people are in debt, they avoid medical care, home repairs and other expenses that not only benefit them, but create a ripple effect in their community.

Indirectly, debt weighs people down and makes them less productive.  A recent article by Steven Rhode in the Huffington Post on the seven emotional stages of debt compares the emotional impact of debt to the loss of a loved one.  If you are weighed down by debt now, I don’t have to tell you he isn’t exaggerating.  My clients come in overwhelmed, ashamed and frightened.  They’re upset that they got themselves into the situation they’re in, though they often had no real control over it.  My job is to help them see how they can get out of it.  I love seeing the relief on people’s faces when I explain to them how bankruptcy works and what it will do for them.

I don’t advise everyone who sees me to file, by any means.  My rule of thumb is, if you can see a way to pay dischargeable debt (typically credit cards and medical bills) off in the next five years and you have the discipline to stick with that budget, that is probably your best option.  On the other hand, if you are paying only minimum payments on credit cards, your creditors won’t work out payments or, of course, if you are being threatened with foreclosure, repossession or garnishment, bankruptcy may be a way to restore your life to normal.

As Rhode points out, “The past does not have to predict the future. You don’t have to be saddled with your old mistakes.”  The important thing is to take action.  If you do nothing, interest will grow, late fees will accrue and collection action will proceed.  If you do nothing, your situation will gradually get worse.

We can’t control what was, but we can control what will be.  If you are weighed down by debt and don’t see a way out, call and make an appointment with a bankruptcy attorney.  Bring your bills, your fears and your questions.  It may be the first step on your path to a better future.