22 Jan I Thought Bankruptcy Was Supposed To Cure My Money Troubles
I had a call from a client last week who screamed at me saying, “I thought bankruptcy was supposed to cure my money troubles.” Cure is an awfully strong word that attorneys and doctors do not like use. Why? Merriam Webster defines cure as: “a complete or permanent solution or remedy.” It is very rare that anyone is ever permanently cured. The same is for an attorney especially one who practices in the bankruptcy arena in an economy that is circling the drain. I am honored that my clients think that I walk on water and can move heaven and earth. However, the fact is I am but a mere mortal and have to work a bankruptcy case within the confines of the law and the behavior of my client.
I know that everyone is stressed right now due to the state of the economy. I know that you cannot get blood out of a turnip. I know that people file bankruptcy to manage financial debt but at no time during my interview process or doing the administration of the case do I indicate that this is an easy process or that it will “cure” anyone’s financial ills. I do not sugar coat what I think a person’s financial situation is. In fact I am doing an injustice if I do not provide a complete analysis of one’s financial situation. People hire me to assist them with getting back on their financial feet. I cannot do that unless I am honest with my client as to whether or not they can afford the Expedition, quarter of million dollar home or motorcycles. My clients do not have to agree but they will have my analysis and opinion before they make that final decision.
Bankruptcy is a tough but it is not an impossible process. Throughout the Bankruptcy Law Network website we have published articles on ways to assist the individual with this process. With that in mind I would like to address a specific issue that is confronting many of my clients today.
One of my Chapter 13 Trustee’s describes the Chapter 13 as “this is the pay to keep my stuff bankruptcy.” You may be paying back a house, a car, taxes, child support or other debts. The key to a Chapter 13 bankruptcy case is that you have to pay. Pay something in order to stay in the Chapter 13 and receive a discharge. The something will be determined by what you are paying to keep, the non exempt equity in your stuff and/or your disposable income. A bankruptcy case is just like a snowflake. Each one is unique and there are no two cases alike. So the amount you need to pay may be a moving target. There are many factors that go into this such as a pay change or you decide to surrender a vehicle or a home. Regardless of the reason for the Chapter 13 or the issues underlying one’s case there is still a common denominator. An amount still has to be paid into the court in order for you to receive the privilege of being in a Chapter 13 bankruptcy proceeding.
I know that is very frustrating if you just got laid off from work or your hours have been cut. I try to explain to my clients to view this situation in this light. Do you work for free? You are probably underpaid as many Americans are but if you put in a days work you expect a days pay. If you sell your vehicle to someone else you expect to get paid. If you loan money to a friend or relative you expect to be paid. It is no different for the creditors. For the sake of this article I am just referring to the secured creditors in your case. The house payment, the car payment and any other secured debt payment must be paid while you are in a Chapter 13. Although I can suspend or delay payments for a couple months the bottom line is the creditor is allowed to either collect their debt or pick up your asset.
I believe that most people know this in their heart of hearts. Unfortunately the stress of the economy is interfering with people’s ability to think rationally. The hard truth is that some people do lose their homes and vehicles in the middle of a bankruptcy due to a job loss. I wish I could save the world but I can only attempt to resolve one issue at a time for a client. The resolution itself may be hard and may not be the answer that you are hoping for. But the goal of a bankruptcy attorney is NOT to cure your financial ills but rather provide you with tools so that you may begin to regain financial control.
Remember that knowledge is power and the more knowledge you have about budgeting and the true purpose of bankruptcy the more power you will have to emerge from bankruptcy with the tools to regain financial control. Using military strategy your goal is to win the war against debt even if you may lose a battle or two along the way.
Written by Kansas City Missouri Bankruptcy Attorney, Rachel Lynn Foley.