Daily Archives: August 11, 2015

Why Feel Good About Filing Bankruptcy?

Yahoo finance recently had a story about a woman in Michigan who bankruptcy client

filed bankruptcy, and how that turned out.

I tell my clients that, if they are happy about filing bankruptcy, there is something wrong with them.

Only a con man or hustler would be happy about filing bankruptcy.

From the Yahoo article:

For Tennille Flowers, walking into bankruptcy court was one of the scariest moments of her life.

She had some credit card debt, and lots of medical bills, and student loans that were not discharged in her chapter 7 bankruptcy.

The article incorrectly states that she saw a bankruptcy judge.
Bankruptcy judges are there to resolve disputes.  They are actually prohibited from attending the initial bankruptcy hearing, the 341 meeting of creditors.

The trustee appointed by the Bankruptcy Court presides over the initial hearing, and there are 7 or 8 or more set every half hour, so they do not take long.

They are for discovery purposes, if creditors or the trustee have questions.  Nothing is decided at that hearing.

Mis-named, because creditors rarely appear.

But back to Ms. Flowers.  Why did she file bankruptcy?

She had no income.

There is NO minimum amount of debt you have to owe to file bankruptcy.

And, the time to file, is when you are broke.

Bankruptcy is, and should be, a last resort.  But, if you have no income, what is your plan for paying the debts?

From the same story:

“My accounts were in collections by the time I filed,” Flowers says. She was getting calls from debt collectors, some of whom were resorting to intimidation. 

“That’s pretty scary, having someone on the other end of the phone yelling at you in a situation where you feel like there’s nothing you can do, and you’re trying your best and it’s not enough,” she says. “A couple times they brought me to tears. That entire period of time, you feel like you’re walking on needles because you’re emotionally frazzled.”

That is what debt collectors do, try to frighten you into sending them money.

The Constitution directs that Congress establish uniform laws of bankruptcy.

So, if you need to, exercise that Constitutional right.

And, as Ms. Flowers says:

Looking back on her experience, Flowers emphasizes that it’s important to research your options and make a game plan before filing for bankruptcy.

That is what I am here for.

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