As a practicing attorney since 1973, I have heard a lot of people tell me stories about their beliefs concerning bankruptcy. It seems that many people really have a total misunderstanding of the bankruptcy process, and the main purposes of bankruptcy.
The reality is that Congress established the bankruptcy laws to give honest people who have gotten into significant debt an opportunity for a fresh start. Congress did not believe that people should be overwhelmed and overburdened by debt which would make their lives miserable. Congress felt that honest people who have gotten into financial difficulty should be entitled to put the past behind them and move forward with a much better and brighter outlook for the future.
Furthermore, bankruptcy has its roots in The Bible. The Old Testament, in the Book of Deuteronomy, discusses forgiveness of debts. One of the more prominent former Bankruptcy Judges in Camden, Judge Judith Wizmur, talked about Bankruptcy having its basis in The Old Testament.
I could probably write a book about the many stories I have heard people tell me over the years about what they believe might happen to them if they file for bankruptcy. Let me give you just a few brief examples of the misconceptions that I have heard from people throughout the years. I call these examples the Top10 Bankruptcy Lies.
The following statements are totally untrue. They are simply examples of some of the things that some people incorrectly believe about bankruptcy.
“If I file for bankruptcy, I will never be able to get credit again.”
“If I file for bankruptcy, I will never be able to buy a house.”
“If I file for bankruptcy, I will have to give up everything I own.”
“If I don't pay my bills, I will have to go to jail.”
“If I miss my mortgage payment for one month, I will be locked out of my house.
“If I file for bankruptcy, I can never again get a credit card.”
“If I file for bankruptcy, I will have a black mark on my record for the rest of my life, and I will be stigmatized and traumatized for the rest of my life. It is so shameful to have to file for bankruptcy.”
“If I file for bankruptcy, I can't get credit for seven years.”
“If I file for bankruptcy I'll never be able to buy or finance a car.”
“If I file for bankruptcy, everyone will know about it.”
All of the above items are hogwash and baloney and are not true – they are lies that your creditors want you to believe. Don't let your creditors or anyone else scare you or mislead you. Learn the truth.
THE TRUTH IS that the primary purpose of bankruptcy is to give an honest person a fresh start. Over the years, I have represented thousands of bankruptcy clients and I have had numerous bankruptcy clients who have reestablished their credit quickly and easily.
THE TRUTH IS that I have many clients who have gotten credit card applications in the mail within months and sometimes even within weeks of filing bankruptcy. I have clients who have financed a motor vehicle purchase within months after filing bankruptcy. I have clients who have been able to finance the purchase of a home about two years after they received their bankruptcy discharge.
THE TRUTH IS that the average person who has filed bankruptcy is generally considered to be a much better credit risk after that person successfully completes the bankruptcy.
THE TRUTH IS that this person will often have greater creditworthiness after they have successfully completed their bankruptcy. The reason is simple. A person who is deeply in debt, not making a whole lot of money, and not able to pay his/her bills is not going to get much credit. Most people in this situation have already maxed out their credit cards and don't know what to do next.
On the other hand, once a person has successfully completed the bankruptcy process, that person is just about debt-free.
THE TRUTH IS that if that person continues to pay bills that were not wiped out by the bankruptcy, and if that person pays future bills that are incurred after the bankruptcy, and if that person maintains good employment, there is no reason that a typical creditor would not offer credit to such an individual. Why not? The person works, the person pays his/her bills, and that person has now been proclaimed to be legally debt-free or virtually debt-free.
If it is done properly, bankruptcy can be a very positive experience that results in a person's financial future being much brighter and much more fulfilling.
We have had many people tell us how much happier they were after they filed bankruptcy, how much less stress and aggravation they had, how they slept better, and even how their marriages improved because there was so much less financial strain and aggravation which had previously disrupted marital harmony.
Done properly, bankruptcy can be a very rewarding and positive experience that can give you a much brighter financial future.
The purpose of the bankruptcy discharge is to give you a fresh start in life. The Bankruptcy Code gives you that in the legal sense, by relieving you of the obligation to pay your debts, so that you can start over.
When Congress enacted the Bankruptcy Code, it believed that there should be no stigma or shame involved in needing to seek relief in bankruptcy. However, many people who have filed for bankruptcy still feel guilty or ashamed that they have needed such relief.
If you've gone through a successful bankruptcy, I might say something like this to you:
Congratulations on your fresh start. You certainly deserve it. You've gotten debt relief, and you have also hopefully gotten a lot of stress relief. Just as Congress has forgiven your debts, so you should also forgive yourself for requesting such relief if you feel badly about it. Many people need such relief at some point in their lives for a great variety of reasons. Whatever your reasons may have been you will not do yourself or anyone else any good by punishing yourself about it. So, learn what you can from this experience, wipe the slate clean in all respects, and best wishes and blessings to you on your fresh start. Hopefully, there are much brighter days ahead for you and your family.