If you are reading this then you have been in the position of having bills due that you cannot pay. The reasons vary but they include job loss, reduction in income, getting over-extended, medical expense, and emergencies. Most often these are issues you have no control over.
Sometimes things work out. You get another job. You get overtime at work. A relative or friend helps you financially. Your creditors are just willing to wait and you can manage to get back on track so to speak.
Other times things can quickly go wrong, especially if the creditors are not willing to work with you. Your phone begins to ring all the time. You get flooded with collection letters. Eventually your local sheriff shows up to serve you papers and you must appear in court. Suddenly there is a threat of repossession, garnishment, foreclosure or some other financial disaster.
As things spiral out of control you begin to suffer physically and mentally. Lack of sleep, not being able to open mail, not answering your phone or screening your calls, worrying over bills, feeling exhausted, out of control, are some of the things people go through when dealing with unmanageable debt.
This loss of control begins to permeate your entire life and begins to push out all the things that keep you going. You may have suffered from feelings of embarrassment, shame, or anxiety. Sometimes depression sets in.
First off, you are not alone if you ever felt stressed about your financial life. Chances are your family members, friends and neighbors are worrying about paying bills right now. Most people are over extended but not aware of it because their cash flow has not been interrupted. They are paying on debt, but the debt is not going down. All it takes is one problem to push them into default.
The vast majority of people that owe money want to repay their creditors. It is that desire to pay creditors coupled with an inability to do so that becomes a major source of our anxiety and depression.
We need to look at how we got here just for a minute and what it means. The idea that all debt will be repaid is not accurate. It never has been. It is a personal ideal for us as citizens but not one our banks share.
Creditors build into their interest rates a portion that covers for default or nonpayment of debts. Your creditors know there are times when it will be impossible for people to pay them.
Banks want to be able to loan money freely and there is a general idea that this is not a bad idea if there is transparency in the terms of the loan or credit. In most cases we have reduced or removed the regulations that govern the extension of credit and allowed the free market to drive the choices of both consumers and banks.
Banks have figured out that it is easier and more profitable to increase the interest rates on debt to cover the potential losses than it is to screen people individually that are borrowing money. You can choose to borrow money that is not tied down to a fixed payment through credit cards and lines of credit. This ability was non-existent for most people prior to 1950. Now that more money is going out with less screening and without fixed payments it is easier to accidentally over-extend yourself.
The credit system we have in place creates a disconnect between what we can borrow and what we can safely afford. We are more leveraged today than ever before and it does not seem as though this will stop.
At the same time, we have certain expenses that have grown at phenomenal rates, including healthcare, housing, transportation and education. Adding these issues onto our personal debt load and you have an economy that works for people who have large amounts of disposable income but is dangerous for anyone else.
I think Americans are eternal optimists. We believe in ourselves and we are willing to take on a substantial level of risk because we think we can cover it. We always tend to think tomorrow will be a brighter day. Today, however, we have less in savings compared to our debts and whenever there is an unforeseen financial downturn the average American has more difficulty coping with it.
The bankruptcy system is designed to deal with this disconnect between risk management, income disparity and the ability to pay. It is an integral part of any strong economy and provides an outlet to deal with the problems that plague so many normal people that are over-extended.
Bankruptcy will give you immediate relief in terms of dealing with the creditors – those creditors that were calling you, your work, and your family must stop. No more collection letters. No more threats. No more appearing in front of Judges. No more wage garnishments. No more doubting whether you can deposit that paycheck at the bank because you are afraid it will be taken.
Most, if not all, of our clients say “I just wish I would have filed sooner.“
You get to bring your creditors to one place to deal with things, and there is a bankruptcy judge to oversee the process. This is completely different than trying to settle with creditors outside of bankruptcy where there is rarely any oversight by a court. Your creditors must go through the bankruptcy system to deal with you. You can hire an attorney to represent you throughout the entire proceeding. The fees charged by the attorney are supervised by the court.
Bankruptcy gives you control of your circumstances. It allows you to focus on living, working, your family, and your life. Your attorney and the bankruptcy court stand between you and your creditors. You will be able to focus on your well being.
If you need help or if you just want to talk about your finances please reach out to us. We are happy to talk with you for free and help you figure out if bankruptcy is a solution for you and what it will take to make it happen.