Why
should I hire a lawyer?
How Long Does Bankruptcy Stay On Your
Credit Report?
What About Credit Counseling?
What Is The Difference Between Credit
Counseling And Bankruptcy Counseling?
Isn't Borrowing or Refinancing Better
Than Bankruptcy?
Should I Borrow From Friends Or Relatives
If I Can't Pay My Bills?
Aren't People Who File Bankruptcy Bad People?
No! Most people who file bankruptcy have had a job layoff, a cut in pay, sickness,
or divorce. The bankruptcy laws are designed to help honest people in trouble. Contrary to what you might hear from the media,
the system is not meant to help dishonest people or people who can afford to repay their debts. It is for people in real need.
Doctors, lawyers, teachers, bankers, engineers, housewives, mechanics, postal workers, salespeople, contractors, etc. are
just some of the jobs held by past clients. The one thing they have in common seems to be that they can't pay their bills,
and they would if they could!
What is a "Debt Relief Agency?
Under the Bankruptcy Act of 2005, anyone who gives bankruptcy advice is
now called a "Debt Relief Agency", and must include that phrase that they are a debt relief agency and file bankruptcy cases
for people. This language is required to be included in any advertisements or anything
that might be a way for new clients to find them. There is no test to become a Debt Relief Agency, you just are
one if you give any advise about bankruptcy. One thing that I have noticed is that if you don't see the required language,
you can be sure that the person is not even aware of the very basics of the bankruptcy laws. (If you do see it,
it doesn't mean they are knowlegable, just that they know they have to use the language.)
All bankruptcy lawyers are Debt Relief Agents, but not all Debt Relief Agents
are lawyers and they might not have any qualifications to provide advise. Be sure you know who you are speaking
to and that you know they are skilled in their field. There is no test or course you have to pass to be a "Federal
Debt Relief Agent." Remember, only a lawyer can give legal advise.
To require a lawyer to call themselves a Debt Relief Agent is, in my opinion, a
very silly rule that was put into the new law. The only reason I can think of is that Congress rquires this language
is that they thought that people were being tricked into bankruptcy and wanted all advertisements to be clear on the nature
of services. Perhaps it was an issue but it was probably wasn't involving a lawer. I have never encountered
anyone who was tricked into bankruptcy by a lawyer. I, and the lawyers
I know, usually prominently display "Bankruptcy" as a service we provide.
I have known people who were tricked into bankruptcy by non-lawyers, but these
people probably aren't people who are using the required Debt Relief Agency language. I have seen instances where cases were filed by companies or individuals who prepared bankruptcy
documents, and who said they were helping people try to stop foreclosures or settling their debts and the people
didn't really understand that they were filing bankruptcy. I have seen cases where the preparers even
forged signatures so the people didn't even know they had filed bankruptcy (The people I met
needed to hire a lawyer to help fix the mess the non-lawyers created.)
Anyone who gives bankruptcy advice of any kind must advertise that the are a
Debt Relief Agent, and this can include Credit Counselors (Debt Management Programs) or even ministers and financial counselors!
My guess is that the majority of people complying with this law are lawyers, and that many people who should comply, are not.
So I may be required to call myself a Debt Relief Agent, but what I really
am is a lawyer who has concentrated in bankruptcy law since 1988!
Why Do You Think Bankruptcies Are on the Rise?
Some people do everything right and still have to seek protection in the bankruptcy laws. But the biggest factor I see
that leads to filing bankruptcy is the easy availability of credit cards. Rather than seek help early, people borrow getting
deeper in debt until the only option available is bankruptcy.
What Would You Advise People To Do?
I encourage everyone to stop using credit except in limited circumstances. Credit
is an expensive way to buy things since you add interest to the cost. If you can eliminate interest from your family's budget
you will have more money to buy things, to save for emergencies, children's education, retirement, or even your dream vacation.
If you are debt free, you will be as prepared as you can be to meet your basic living expenses if you lose your job or have
a medical problem - since you would not have to worry about bill payments on credit items.
Should I Prepare a Budget?
Prepare a budget. Many people have never prepared a budget before meeting with
me or have never discussed finances with their spouse. All families need a financial plan. Everyone needs to know where their
money goes. Think about what you need vs. what you want. Save now, pay later and you will save lots of money on interest payments.
Many clients tell me that they used their credit cards for emergencies, but most
things that they call emergencies are things that we all should know will happen to us.
If you drive a car, it will need repairs, new tires and oil changes.
If you are a human being, you will need to see a dentist, get medical attention, and buy medicines. If you own
a home, it will need maintenance, the plumbing fixed, new appliances, and a new roof every twenty or so years.
The things we usually call emergencies are things we can all expect to happen.
For a budget to balance, you must plan for these things by putting
money away each month so it is there when you need it.
Do I Owe Enough To File Bankruptcy?
There is no set amount that qualifies you to file, or not to file, bankruptcy
(although if you have a lot of debt, you may not be able to file for Chapter 13 repayment.) Many people think
there is a magic number for being eligible to file. The decision to file is an individual decision that is based upon
a lot of things, including the amount of debt and how much you can afford to pay back.
