As a solicitor, I have got a duty to keep an eye open for the best interests of my clients. I also have a duty to look out for the best interests of potential customers, folks who come to me for help but do not really wind up hiring me. That duty sometimes includes advising folk NOT to file a bankruptcy case.
What is the common reason explaining why I turn clients away? It is not because they need to try hard to pay their obligations. It's not because I believe they are being deceptive. The most common reason why I advise folk not to file for bankruptcy is really because they have nothing to protect.
That's sometimes hard for folks to get their heads around. Insolvency law doesn't exist to guard folks who've nothing; Insolvency law exists to protect people who still have assets. It enables people to save those assets, and avoid losing everything.
I frequently see a potential client with the following situation: She's being harassed by debt recovery operatives. Her only source of income is social security, or maybe employment income in a small amount. She doesn't own a home and does not have much money in the bank. Her only debt is medical debt, credit cards, and perhaps some payday loan. She sustained those obligations honestly, but she is not going to be in a position to repay them.
Believe it to be true or not, this person should not go into bankruptcy.
First, she doesn't need to file for bankruptcy to stop the phone calls: Under federal law (and, for those in California and certain other states, under state law), if she informs her creditors of her inability to pay, they must stop contacting her. If they do not stop, she has a potential court action against them.
What's more, whether or not the debt collection operatives sue her (which they could still do), and even though they get court judgments against her, how are they ever going to be well placed to collect? They can't garnish her wages: Social Security isn't garnishable and her work income is below the garnishable amount (which varies from state to state). She doesn't have any money in the bank to levy. She doesn't have a house for them to put a lien against. They can't get blood from a stone. She's judgment-proof.
Alternatively, if she files a bankruptcy case, she will have to pay a counsel. She may have to pay Court filing fees. Perhaps more vital, she won't be in a position to file again for another 8 years. What if she's got a medical emergency next year and incurs more medical debt?
If her circumstances change, then my recommendation changes. Shall we say she regains full employment. Let's say a relative passes away and leaves her a partial interest in a bit of real-estate. Now she has assets to protect. Now she has got a reason to file bankruptcy. She needs to be in a position to keep those assets to enjoy a real fresh start.
You could be in a similar situation. Maybe you lost your job, and then after the unemployment insurance ran out, you began using your credit cards to buy groceries and pay bills. Your automobile was foreclosed, and the lender says you still owe them money. Now you finally found work again, but you are sill loaded with those debt. You presumed that filing for bankruptcy was for people at the bottom, not folk on the way back up. That's not quite right; the insolvency laws exist to help folks just like you.
What is the common reason explaining why I turn clients away? It is not because they need to try hard to pay their obligations. It's not because I believe they are being deceptive. The most common reason why I advise folk not to file for bankruptcy is really because they have nothing to protect.
That's sometimes hard for folks to get their heads around. Insolvency law doesn't exist to guard folks who've nothing; Insolvency law exists to protect people who still have assets. It enables people to save those assets, and avoid losing everything.
I frequently see a potential client with the following situation: She's being harassed by debt recovery operatives. Her only source of income is social security, or maybe employment income in a small amount. She doesn't own a home and does not have much money in the bank. Her only debt is medical debt, credit cards, and perhaps some payday loan. She sustained those obligations honestly, but she is not going to be in a position to repay them.
Believe it to be true or not, this person should not go into bankruptcy.
First, she doesn't need to file for bankruptcy to stop the phone calls: Under federal law (and, for those in California and certain other states, under state law), if she informs her creditors of her inability to pay, they must stop contacting her. If they do not stop, she has a potential court action against them.
What's more, whether or not the debt collection operatives sue her (which they could still do), and even though they get court judgments against her, how are they ever going to be well placed to collect? They can't garnish her wages: Social Security isn't garnishable and her work income is below the garnishable amount (which varies from state to state). She doesn't have any money in the bank to levy. She doesn't have a house for them to put a lien against. They can't get blood from a stone. She's judgment-proof.
Alternatively, if she files a bankruptcy case, she will have to pay a counsel. She may have to pay Court filing fees. Perhaps more vital, she won't be in a position to file again for another 8 years. What if she's got a medical emergency next year and incurs more medical debt?
If her circumstances change, then my recommendation changes. Shall we say she regains full employment. Let's say a relative passes away and leaves her a partial interest in a bit of real-estate. Now she has assets to protect. Now she has got a reason to file bankruptcy. She needs to be in a position to keep those assets to enjoy a real fresh start.
You could be in a similar situation. Maybe you lost your job, and then after the unemployment insurance ran out, you began using your credit cards to buy groceries and pay bills. Your automobile was foreclosed, and the lender says you still owe them money. Now you finally found work again, but you are sill loaded with those debt. You presumed that filing for bankruptcy was for people at the bottom, not folk on the way back up. That's not quite right; the insolvency laws exist to help folks just like you.
About the Author:
Peter Taylor is a senior financial analyst for business loan and low fees foreigner loan in singapore . In recent times he has taken up to provide independent financial advice through low charge license moneylender
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