Am I A Bad Person If I File for Bankruptcy?

12 Oct Am I A Bad Person If I File for Bankruptcy?

Almost all of my clients hate to schedule their first appointment with me.

It’s not because I’m a bad guy, or that I treat my clients poorly–just the opposite. My clients are shown respect and understanding, and we give them a ready ear to hear their problems. So why don’t people want to meet with me?

It’s because almost all people who file for bankruptcy feel embarrassed. They feel that they are a failure. They feel ashamed that they cannot pay their bills, or that they are faced with a foreclosure, or a lawsuit. They feel completely alone, a pariah with a large letter “B” tattooed on their forehead that people will point to and turn away. They think they are a bad person for even thinkingabout filing for bankruptcy.

While these feelings are real, they are wrong.

Debt problems are nothing recent. In fact, the historical basis of bankruptcy can be found in the Bible. In fact, the seven-year forgiveness of debts in Deuteronomy 15 is why Chapter 7 received its name.

Bankruptcy is part of American history as well, going back to the Constitution. It even predates the Bill of Rights. The right of Congress to establish laws for bankruptcy appears in the 1789 Constitution in Article I, Section 8. The Bill of Rights wasn’t adopted until 1791. Why? Some of the Founding Fathers of this country, among them Patrick Henry and Thomas Jefferson, had severe debt trouble. Much of President Jefferson’s property, including his home, Monticello, was sold after his death to pay his debts.

Many famous people have filed for bankruptcy, among them President Harry S Truman, Walt Disney, John Wayne, Donald Trump (3 times), Willie Nelson and Larry King. And, of course, the number of multi-billion dollar corporations that have filed is too large to mention.

So why the shame?

Part of it is that most folks are good, honest people who genuinely want to repay their debts. In fact, most of my clients would have been better off financially had they seen me a year earlier. But they don’t, because they try to work things out without having to file for bankruptcy. The problem is that, in today’s financial market, creditors make it as hard as they can to do this. They hike interest rates up to 30%, charge huge fees, call and write with nasty threats, and are unwilling to work with people who just need a bit of time to get things back on track.

By the time most of my clients meet with me, they have already paid back, in full, the amount of money they borrowed on their credit cards, paid an equal amount–100%–in interest and fees, and are working on 200% to 300% of the original amount.

So why do they think they’re such bad people?

Creditors have an economic interest in making people feel bad about filing for bankruptcy. They run ads saying what a terrible thing it is. They whisper that it’s immoral. Their collectors make people feel like scum. And, since people want to do the right thing, these messages fall on fertile soil…and make people believe that they are bad for even considering bankruptcy, let alone actually filing.

They aren’t.

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Brett Weiss, a senior partner at The Weiss Law Group, LLC, represents people and businesses in all phases of bankruptcy. He has experience in complex individual Chapter 7, Chapter 11, and Chapter 13 bankruptcy cases, and in Chapter 11 small business restructuring and reorganization. Mr. Weiss lectures nationally on bankruptcy issues. He has testified before the Federal Bankruptcy Rules Committee, the Consumer Financial Protection Bureau, and has twice testified before Congress on bankruptcy and credit issues. Brett Weiss is the co-author of Chapter 11 for Individual Debtors, and has written Not Dead Yet: Bankruptcy After BAPCPA, for the Maryland Bar Journal, as well as hundreds of blogs for the Bankruptcy Law Network. With his colleague, Daniel Press, he recorded a 13-hour basic bankruptcy training series, and leads intensive three-day Chapter 11 training boot camps. Mr. Weiss has received international media attention in connection with his work. He was interviewed by Barbara Walters on The View, has appeared on the Today Show, Good Morning America, ABC News with Peter Jennings, the Montel Williams Show, National Public Radio, AARP-TV, the BBC World Service, German state television, and numerous local radio and television programs, and been quoted in Money magazine, The Washington Post and The Baltimore Sun, among others. Brett Weiss is the previous Maryland State Chair for the National Association of Consumer Bankruptcy Attorneys, a founding member of the Bankruptcy Law Network, on the board of the Maryland State Bar Consumer Bankruptcy Council, and a member of the American Bankruptcy Institute and the Bankruptcy Bar Association of Maryland. He has received the Distinguished Service Award from the National Association of Consumer Bankruptcy Attorneys for his work on behalf of consumers across the country. Mr. Weiss is admitted to practice before Maryland and District of Columbia federal and state courts, the United States Courts of Appeals for the DC, Fourth and Eighth Circuits, the United States Tax Court, and the Supreme Court of the United States, and has been practicing law since 1983.
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