24 Mar Good Morning America Reports On The Economic Crises.
As a bankruptcy lawyer, I am interested in how people are being affected by the economy, and how they can best survive and protect their family’s income and financial future. I try to stay up on the issues and watch for information in the news to learn about areas out side of my bankruptcy practice, so that I can give them well rounded advice on bankruptcy, or avoiding bankruptcy.
Good Morning America has been doing an ongoing series on how individuals and families can survive the economic crisis. They have featured speakers such as Dave Ramsey, Suze Orman, and Mellody Hobson among others. These three offer advice about how they think people can survive the upcoming economic crisis. In an effort to keep in touch with the times and people GMA is allowing people to tweet questions for the financial gurus to answer. Here in lies my current dismay with the advice that was dispensed recently.
Dave Ramsey was asked a question by a gentleman who was unemployed. The gentleman wanted to know if he shouldfile for bankruptcy or use a debt consolidation company. Dave’s first answer was that a debt consolidation company was a bad idea because you are only paying someone to pay your bills. I agree with this point because to this day I have NOT found a debt consolidation company that does any good. However Dave’s second answer was not only offensive but it was and is down right irresponsible.
I generally like Dave’s no nonsense financial advice because for the most part it makes sense. Dave however has crossed the line informing the public that bankruptcy is not the answer, period. So let’s walk through Dave’s answer to this gentleman who is already stressed and looking for help.
The question again was; does one use a debt consolidation company or file bankruptcy when they are unemployed and the debts have piled up? Dave’s answer is as follows (the answers may not be exact but I believe they are correct in context):
- You need to get a job. Duh! This gentleman did not say he did not want to work he said he cannot find a job. Big difference. Dominoes Pizza only needs so many drivers. There is a reason why the unemployment level is the highest in 24 years.
- You need to change your phone number or ignore the phone calls. Great advice there Dave. Although I do advise my clients to do this if and only if they are filing bankruptcy I do not advise it if they plan to pay the debt, because then you do not know when they are getting ready to file a lawsuit. I also advise my clients to give my name and number to the creditors and as a result the phone calls generally stop. Why? Not because it is the law but because we keep them informed of the progress of the bankruptcy.
- You need to ignore or throw away the bills. This is absolutely horrible advice because the creditors can and will sue you if you continue to ignore them.
- When you get a job pay your bills. Continue reading below.
Mr. Ramsey is not a lawyer and has not been trained in the bankruptcy code. However, he feels free to issue all kinds of advice about bankruptcy. Dave states that bankruptcy is gut wrenching and the repercussions will have a lifetime affect. Although whose to say that he would be as financially sound as he is if he did not dump his debt back in the Eighties. He like Walt Disney entered bankruptcy with a multitude of debt and came out the other side fiscally responsible and financially sound. This sounds like a pretty good result stemming from bankruptcy. In fact it sounds like a fresh start which was the congressional intent when the law was enacted.
No one said that bankruptcy is easy or that bankruptcy is the answer for everyone but to totally dismiss the opportunity to get a clean slate without getting more facts is as irresponsible as a doctor diagnosing a patient without seeing them. Mr. Ramsey, if God forgives your debt every seven years I think it is about time for you to stop being so judgmental of those considering bankruptcy. So let’s finish the review of Dave’s advice by letting you know what the results would be if you follow his advice.
If you ignore the creditors they will step up their collection efforts. During this ignoring period collection efforts will be stepped up and you will be harassed about the growing debt. You see your debt continues to grow as you continue to ignore the bill. When the creditors cannot get a hold of you they will attempt to call your family and harass them or they may come knocking on your neighbor’s doors. Is this action unethical or illegal? Yes, but then so is false accounting but that does not seem to stop many of our corporations or individuals.
So the collection efforts have failed so as a result the creditor hires an attorney. Insert sound of a cash register here. Now you have the base debt, late fees and penalties, accruing interest plus attorney fees. The attorney contacts you and you continue to ignore them. The attorney files suit and has you served you with a summons to appear in court. Again you continue to ignore them due to the sage advise of Dave Ramsey and now the creditor’s attorney takes a judgment against you. Congratulations! Now you have the base debt, late fees and penalties, accruing interest, attorney’s fees and now judgment interest. Does it stop here?
No it does not. Now the debt continues to grow and the creditor’s attorney has the judgment certified for a judgment lien. This lien can now be registered against your house, car, and/or bank account. So that bank account that you are living off during this time of ignoring the creditors has now been garnished. Now you are unemployed and broke. Not to mention that when you do go back to work that attorney is going to track you down and garnish your wages. Great advice because now you cannot get caught up on the arrears related to the utilities because you are being garnished and have to choose between food, utilities or medicine.
Oh, that is right Mr. Ramsey, non-attorney, he is not broke, he is unemployed and I am infuriated! So this poor soul seeks sage advice from Dave Ramsey and Dave basically berates him and indicates that he has chosen to be unemployed.
Enough is enough. Knowledge is power and if you want the power to survive this financial crisis speak to a qualified bankruptcy attorney. Why? Because a qualified bankruptcy attorney will outline your rights under the law and we just might be able to preserve your life savings while getting a fresh start.
When I listen to the poor advice that Suze and Dave give, I often think of my clients. Especially the time I received a call from a distraught wife who said that if I could not file the bankruptcy she was afraid her husband was going to commit suicide.
I was able to get them in to review their case and file. You see they too were unemployed and the debts were piling up. The point that pushed the husband over the edge was the fact that his neighbor, a young husband and father killed himself. The neighbor was also unemployed and felt like a failure and subsequently killed himself. He could not find a job and the debt was piling up and he could not take care of his family. This tragedy played heavily on my client’s well being.
After I reviewed my clients’ case and filed the bankruptcy the husband stated that he wished he knew earlier that relief through bankruptcy was available. If he had known this earlier he could have spoken to this young father and husband and informed him that bankruptcy might be able to help him. My client believes that if he was able to speak to this father about bankruptcy than he might have still been alive today.
My clients are in a successful bankruptcy and learning to budget. As I am not a psychologist or therapist I advised my clients to seek counseling from a professional to deal with suicidal thoughts. One must learn where one’s professional boundaries end and when to refer to another professional.
If you were diagnosed with cancer and told that you have two months to live, would you roll over and die or would you seek a second opinion? The same is true when it comes to your financial well being. Get a second opinion from a licensed bankruptcy attorney. To find a qualified bankruptcy attorney to investigate your rights under the law, click here.
Written by Kansas City Bankruptcy Attorney, Rachel Lynn Foley.