28 Oct Bankruptcy’s Real World v. Bankruptcy Road Rules
On MTV each year, the network promotes a “battle” between two sets of reality show stars: Real World and Road Rules. Each show advertises how “real” the show is, showing moment by moment in its young 20-something (or younger) stars’ lives. And at the end of the show, the new reality stars move on, get paid some bucks for participating, get their moment of fame on television, while spending time in an exotic location.
Reality is not quite like that. The “Real World” , “Road Rules”; or “The Real World v. Road Rules” are myths created by MTV to draw in viewers. Bankruptcy’s Real World isn’t so much fun when the party’s over, you’ve been fired from your job for being gone for six months, and credit card bills from the six months in Miami, Boston, New York, Europe come tumbling into your mailbox.
Even so, there are myths for everyday folks too. Sometimes folks who have filed a Chapter 7 in the recent past find themselves still in financial trouble–either as a result of new issues or because they haven’t changed their financial thinking since the first bankruptcy. And they think that perhaps a Chapter 13 will solve all their problems, and who needs an attorney anyway? Or they believe one of the bankruptcy myths is true, as explained by my colleague, Jill Michaux , in Kansas. Recently, Judge Margaret McGarity has written an article entitled Myth Meets Chapter 13 posted on the new website, ConsiderChapter13.com hosted by the National Association of Chapter Thirteen Trustees. Judge McGarrity’s humorous, yet admonishing explanation of the difficulties inherent in Chapter 13 bear repeating:
I don’t want my mother in the bankruptcy, so I’ll just leave her out. Nope, all creditors are listed, even those you don’t particularly want to find out. Failure to do so risks dismissal, and bankruptcy protection goes out the window. Having the right to keep your secured creditors at bay and to discharge much of your unsecured debt does have some unpleasant duties that go along with it. Besides, Mom might just want to file a claim and get a piece of the action.
I can stop making mortgage payments when I file. Only if you like living on the street. The mortgage holder on your principal residence still has a right to be paid according to the terms of the mortgage. If you can’t do that, or refinance, chapter 13 won’t help you for long. The creditor can move for relief from the stay, and if you can’t pay the mortgage even with protection from all those credit cards, game over.
I’ll just get as much cash out of my credit cards as I can and then file the chapter 13 and pay them pennies. Not so fast, Fraudbreath. Taking out loans you have no intention of paying used to be dischargeable in chapter 13, but no more. This assumes the creditor is awake and objects to the dischargeability of the debt. Better not take the chance (oh, and by the way, it would be wrong).
I don’t have to list the Harley Davidson I titled in my girlfriend’s name, right? Don’t you know the thirteenth badge of fraud is “Harley titled in girlfriend’s name?” You’re making the payments on the debt in her name, you’re riding around on the hog bold as brass, so why not just send out engraved invitations to a hearing on the objection to confirmation? Sheesh.
I like Judge McGarity’s style–her honest, frank and humorous approach to educating debtors should strike a chord with folks.
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