Bankruptcy Realities
Friday, January 14, 2011 at 3:07PM May 2010
Nash Law Firm, PLLC
By: Stephen J. Nash
nash@nash-law.com
Bankruptcy used to be something for "other people". Middle America never thought that this was something they would ever have to face unless they had a medical catastrophy. In fact, the bankruptcy laws were changed in 2005 to make the filing of bankruptcy more difficult and more expensive with very little uproar from middle America. Its probably fair to say that most silently thought that bankruptcy was too easy for "those people". Well, today, those people are middle America.
With the United States facing the worst economic situation since the Great Depression, middle America is in trouble. With high unemployment rates, wage and benefit cuts, high rate of business failures and the severe loss of real estate value Americans assets have shrunk but their debt has remained the same.
While millions have raided their retirement funds and savings to keep afloat, they are rapidly running out of money and, when they do, the options are bleak. The house goes into foreclosure, the car is repossessed, the bill collectors won't stop calling and the unwanted collection letters begin to mount. At some point in time, the stress and pressure becomes too much and they finally have to consider filing bankruptcy, something they never thought they would ever have to do. But here is the kicker: because of the 2005 changes, they now have to qualify for bankruptcy and the cost has gone from hundreds of dollars to thousands of dollars. The credit card debt they just racked up can't be discharged and they find out that the money they took from their retirement funds could have been protected from bankruptcy but it is now all gone.
If they don't qualify, what do they do? Even if they do qualify, they lose most of the assets that took a lifetime to acquire.
With the United States facing the worst economic situation since the Great Depression, middle America is in trouble. With high unemployment rates, wage and benefit cuts, high rate of business failures and the severe loss of real estate value Americans assets have shrunk but their debt has remained the same.
While millions have raided their retirement funds and savings to keep afloat, they are rapidly running out of money and, when they do, the options are bleak. The house goes into foreclosure, the car is repossessed, the bill collectors won't stop calling and the unwanted collection letters begin to mount. At some point in time, the stress and pressure becomes too much and they finally have to consider filing bankruptcy, something they never thought they would ever have to do. But here is the kicker: because of the 2005 changes, they now have to qualify for bankruptcy and the cost has gone from hundreds of dollars to thousands of dollars. The credit card debt they just racked up can't be discharged and they find out that the money they took from their retirement funds could have been protected from bankruptcy but it is now all gone.
If they don't qualify, what do they do? Even if they do qualify, they lose most of the assets that took a lifetime to acquire.
Something has to give.
We can pray for a miracle that will save us or we can come up with a plan while we still have options. The earlier these debtors (we are all debtors) have a plan, the more options he/she will have and the more likely he/she will be able to get a handle on their debts and get a fresh start even if he/she has to go through bankruptcy. The longer they wait, the the more likely they will have no other option and will end up where they didn't want to be with a result much worse than it had to be.
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NOTICE The foregoing is not intended to constitute legal advice for any specific circumstance, but is intended to reflect broadly applicable principles, under Minnesota law, relevant to a typical situation. Each set of facts and each contract is, or can be unique; the unique facts and specific language of the contract may require a different legal analysis and may result in a different outcome. Before proceeding in reliance upon this or any other general description of law, consult with an attorney competent in the field of practice relevant to your situation. Copyright 2011 Nash Law Firm |