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Bankruptcy is Probably Your Best Option

Dennis C. Hogan Oct. 31, 2019

Bankruptcy. The word is more negative than it should be and conjures ideas it should not. The average person associates bankruptcy with losing in the board game of Life, losing everything you have, or not paying someone to whom you owe money.

If you are hesitant to use bankruptcy laws because of one of these, concerns please allow me to make these two important points:

  1. First, bankruptcy is not the end, it is intended as a new beginning. For those who need it, bankruptcy is the first step of a long term financial savings plan.

  2. Second, a person with the assets to pay the ones who loan them money (creditors) is not allowed to wipe the debt away with no consequences. Let me explain both in more depth.

When rewriting bankruptcy laws in 2001, Congress was concerned about two types of individuals: First were those who used bankruptcy laws multiple times because they had no other means of controlling their budget. For those people, the law now requires that each individual take two courses — one to determine if bankruptcy is truly right for them and the second to give the party in bankruptcy the knowledge to create a budget and saving money to invest for their future retirement. The courses are provided by private companies for a small fee. They can be done online or over the telephone.

The other side of Congress’s concern was the often-reported practice of intentionally going into debt using credit cards to buy consumer items and then using bankruptcy to eliminate credit card debt. The media in the 1990s reported on people filling their large impressive house with expensive items then filing bankruptcy as a trick to avoid paying for the items. The people shown were under no financial stress, so the process appeared to be a soulless con job that benefited the unsavory at the expense of anyone with a solid work ethic.

To combat this abuse of the system, the law now requires a means test to determine if the income of the person requesting bankruptcy protection has an income less than the average in the state. For those with a low income, bankruptcy is available just as it was before the law changed. For those with a high income, more questions are asked and either Chapter 7 is still available to them or a payment plan is in order under Chapter 13.

Regardless of your circumstances going into bankruptcy, you can expect that coming out of bankruptcy, you will have a clearer vision of your healthy financial future.

If you have decided you need bankruptcy protection from creditors or just want to ask more questions, call me at this telephone number: (603) 614-4651.