Michigan Bankruptcy Attorneys & Lawyers

Archive for the ‘Bankruptcy’ Category

One of the quickest answers people will give for not filing bankruptcy is because it is just wrong to borrow money and not pay it back. Society has manipulated or pressured the everyday person into feeling shame about filing for bankruptcy. The problem is things have changed from years and years ago. It used to be if you borrowed money it would be from a friend or a neighbor or the local banker who also attended your church or some other social function. It was the parents that taught their children that you must pay your debts because these people depended on you to repay the loans. In addition, these are the people you would often see. Therefore, you need to keep your family name in good standing. These were also the times when people would make loans based on a handshake. People making loans knew your character and they knew you would do anything to make sure they received their payment either on a regular basis or later on if things got bad and you couldn’t make the payment as was originally agreed. It was during these times when you didn’t have computers analyzing years of data to project profits. This was when you could actually file bankruptcy yourself rather than paying huge bankruptcy attorney fees or having to deal with lots of litigation attorneys because you were being sued.

It was during these times that people really felt the need to repay their loans because it was morally right. So, are we applying morality on only one side? In other words, the consumer or borrower is still being held to the same morality levels and expectations when the lender no longer acts the same way as he once did when lending money. The person who is lending you money most likely is not in your neighborhood and most likely not longer your local banker. The people providing these loans have disconnected as have the terms of their loans. The terms are shorter with larger interest rates and the penalties for paying the loan have quadrupled over the decades.

The lenders do not care or even thing twice about families being thrown out of their homes or people losing their jobs and not being able to make the payments. The lenders have no compassion; they do have passion when it comes monitoring their earnings before, income, taxes, and appreciation or EBITA. They have disconnected from their neighbors and the people they serve. The worries lay only with driving the bottom line while increasing their gross profit margins and decreasing their other direct costs. The lenders of financial institutions that issue credit cards have created policies that are so complex that it makes it almost impossible to eliminate credit card debt unless you are savvy about reducing your credit card debt. In other words, you better know what your interest rates are and how much you are paying each month in interest versus how much you are actually paying on the original loan or credit card balance. You had better be paying more on the principle if you want to get out of any credit card debt.

Why are people reluctant to file bankruptcy?

I already addressed the morality issues. However, there has been a paradigm shift for the way people feel about credit after suffering years of high interest rates and getting nailed with ridiculous fees and not having the power to fight the people other than paying off their debts and closing down the accounts. The reluctance comes from uncertainty of what bankruptcy is and what it has in store for the person willing to go ahead and file. In addition, it does not help that people were scared off by the 2005 bankruptcy reform laws that were widely advertised to make people think that they would lose everything they have if they filed and that they most likely would not qualify to file bankruptcy. Therefore, bankruptcy filings soared in 2004 and 2005. In 2006 and 2007 bankruptcy filings decreased severely because people were scared and bankruptcy attorneys were trying to accustom to the new requirements like filing electronically or file bankruptcy online per the new requirements. After bankruptcy lawyers became accustomed to the changes required by the courts the filings slowly started creeping up to post 2005 filings.

Major reasons for not filing bankruptcy

The biggest reason for people that should file bankruptcy but avoid filing is because of fear. If you ask them if they could legally eliminate credit card debt without losing all their stuff the answer is always ‘yes” I want to do it. However, when you bring the word “bankruptcy” into the mix there is the great pause. People would rather take a home equity line of credit (HELOC) and pay off unsecured creditors thus removing the equity in their home to avoid filing bankruptcy. People will dip into their retirement fund or 401K and pay off creditors to avoid filing bankruptcy. The sad thing is they could save their retirement fund and remove their debt legally if they could get over their fear. They will seek every service to avoid bankruptcy rather than seeing what bankruptcy services are available to help them.  To help people get over the morality issues you need to show what the creditors did wrong and what they did wrong and to let people know it’s OK to file bankruptcy and it’s legal to file bankruptcy.

The only way to remove these major obstacles for filing bankruptcy is to educate people courting bankruptcy with all the bankruptcy facts. You can remove fear by educating people about bankruptcy and educating them about what a chapter 13 bankruptcies and what a chapter 7 bankruptcies is. It is only after educations will the person in debt begin to lose the initial fear of filing bankruptcy. People need to visit online bankruptcy forums or visit several Michigan bankruptcy attorneys to begin to remove this fear. To remove the fear they also need to find out what typical costs to filing bankruptcy are and what typical Michigan bankruptcy attorney fees.