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Are Paying Debts a Moral Obligation?

Yes, you have a moral obligation to pay your debts. But do you have higher moral obligations to release yourself from those debts?

 

You could consider the choice whether or not to file bankruptcy to simply be a “business decision.” Merely a weighing of the costs and benefits of filing and not filing. This weighing would go beyond just the immediate dollars and cents by including intangible factors like the impact on your credit record. But still, in this approach your focus is on “the bottom line,” on what’s “in your best interest.”

That’s fine as far as it goes. After all, corporations of all sizes file “strategic bankruptcies” all the time. Their very smart and well-informed managers decide that bankruptcy is the best way to reduce debt and streamline their operations, so that the business can survive and hopefully thrive into the future.

And who doesn’t want to survive and thrive?

But you are more than a business. More than a corporation. For you, the human costs and benefits have to be added into the equation.  

And that’s where morality comes into the decision. We humans are moral creatures. That means that our important choices are often moral choices, between doing what’s right and doing what’s wrong. To strip this away from our decision about whether or not to file bankruptcy is to dehumanize us. If we don’t engage in the moral component of this choice, we are less likely to make a good decision. And we will likely feel unsettled afterwards regardless how we decide.

So what do you need to do to make a good moral decision?  

First, accept the choices that you made—good and bad, sensible and short-sighted, intentional and forced—and the circumstances that got you where you are now. Accept that you made a series of legal commitments to pay your debts, consider how much choice you had at the time about them, and in hindsight what you would have done differently, if anything. Why are you now not able to keep those commitments?

Second, consider both the moral costs and benefits of continuing to try to meet those financial commitments. The benefit would be keeping your promises to pay, which may be more or less strong of a commitment depending on the circumstances (for example, the carefully considered purchase of a home or vehicle versus incurring an emergency ambulance bill).  What would be the costs in terms of your physical and emotional health, your marriage and family relationships, and whatever other responsibilities you have to your community? You have moral obligations not just to your creditors, but also to yourself, to your spouse, to your kids, and to society in general. Do you have a realistic chance of successfully paying off your debts, and even if so, what would be the likely human costs while doing so? And if you do not have a realistic chance, how do you weigh the benefit of putting up a good fight against the costs that come from just delaying the inevitable?

Third, recognize that you now have both the opportunity and obligation to make a good decision about whether to continue trying to meet those commitments. To just accept the status quo without facing the situation honestly and bravely is making a decision by default, which is likely neither your morally best nor practically wisest move.

Fourth, get advice so that you know your legal options. You might not think you have a moral obligation to do this, but you cannot make morally good choices about how to deal with your legal commitments without knowing your legal alternatives about each of those commitments. You cannot know whether there are more morally acceptable ways to deal with your creditors—such as to file a Chapter 13 payment plan instead of a “straight” Chapter 7—if you don’t know your legal options. When you see the legal structure within which your choices have to be made, that often helps make the moral choices much clearer.

And fifth, look at each of your legal options, and weigh them in light of your different obligations—to each of your creditors, to yourself, your spouse, your family, and anyone else affected.  On one hand, this is an entirely personal decision. You need to look yourself in the mirror and be satisfied that you are doing the right thing. But as with any important decision, you can and most of the time should get help from the right people and resources. As appropriate, talk to your closest friend, your pastor, your accountant, write in your journal, or pray or meditate about it–do whatever you know helps you make a good decision. And although your bankruptcy attorney is primarily your legal advisor, and will respect that the final decisions are up to you, he or she has counseled countless people wrestling with these decisions and so will be able to help you with yours.

Henry David Thoreau said that the “price of anything is the amount of life you exchange for it.” What is “the amount of life” you are giving up until you decide that you’ve got to make a good decision and you go get the legal advice you need so that you can do so?

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A Patriotic Fresh Start

If you’re financially hurting during this 4th of July, you may not exactly be feeling like this is a great country. But it is.


Here’s why:

  • We are the fresh-start nation of the world. We’ve all heard the famous words from the poem at the base of the Statute of Liberty:

Give me your tired, your poor,
Your huddled masses yearning to breathe free,
The wretched refuse of your teeming shore.
Send these, the homeless, tempest-tost to me,
I lift my lamp beside the golden door!

Emma Lazarus, 1883

  • Much of our history is one of migration within or beyond the edges of the country in hopes of finding a better life:
    • in the late 1700s, following Daniel Boone’s route through the Cumberland Gap of the Appalachian Mountains from Virginia to Kentucky
    • during the first half of the 1800’s, pouring into and throughout the Ohio Valley and the Great Lakes region, and across the southeast into Texas
    • from the 1840s through the 1860s, trekking 2,000 mile along the dangerous Oregon, California , and Mormon Pioneer Trails
    • populating the Great Plains as encouraged by the Homestead Act of 1862 which distributed free land  to those who “have resided upon or cultivated the same for the term of five years,” and the Oklahoma Land Run of 1889
    • in the first half of the 20th century, 6 million African Americans participating in the “Great Migration” from the rural South to the urban North and West
    • since the end of World War II, the consistent shift in population from the northeast and Midwest Rust Belt to the southern and western Sun Belt.
  • The spirit of a fresh start is woven into our history and culture, as expressed in our laws, starting with our foundational law, the Constitution: “The Congress shall have Power… To establish… uniform Laws on the subject of Bankruptcies throughout the United States” According to a famous commentary on the Constitution, this clause was not in the original draft, but was added after a vote of 9 states in favor and 1 against.
  • In spite of this clear Constitutional mandate, it took Congress more than 100 years– until 1898—to pass a bankruptcy law that wasn’t repealed within a few years!  We’ve managed to have a comprehensive bankruptcy law in effect ever since then.
  • Property exemptions—your right to keep a certain amount of your property when filing bankruptcy–is the result of a 200-year-old Constitutional battle of states’ right versus federal power.  Throughout the 1800s, the country waged a political and economic war between Northeastern bankers and Western and Southern farmers and small merchants. Because of reoccurring devastating financial “panics” during that century, the farmers and merchants had good reason to worry about losing their homes and farms to out-of-state creditors. As a result, the first law exempting property from the collection of debt was adopted in 1839 in the Republic of Texas, and spread quickly through the South and the Midwest during the 1840s and 1850s. Exemption laws continue to protect our property from creditors today.
  • In spite of huge efforts over the years by creditors to make bankruptcy less accessible to consumers, the Chapter 7 and Chapter 13 options do continue to provide tremendous relief for most people who need them. Although not perfect, they give you a relatively flexible, balanced, and effective way to personally take part in the centuries-old and sometimes necessary American tradition of a financial fresh start.
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5 More Kinds of Chapter 13 Medicine for Saving Your Home

Chapter 13 is extraordinary in the number of distinct ways it can solve debt problems endangering your home. Here are five more ways beyond the five of the last blog.


6. Chapter 13 “super-discharge”: You can discharge (legally write off) some debts in a Chapter 13 case that you cannot in a Chapter 7 one. A couple of decades ago there were many more kinds of debts that could be discharged under Chapter 13, but Congress has whittled away at the list steadily. Now there are two left worth mentioning here. First, obligations arising out of divorce decrees dealing with the division of property and of debt (but NOT the part dealing with child/spousal support); and second, obligations involving “willful and malicious injury” to a person or property (but NOT related to driving while intoxicated). Both of these “super-discharged” types of debts are legally complicated, and definitely need to be addressed with the help of an experienced attorney. But in the right circumstances Chapter 13 can discharge one of your most serious debts, the same one that Chapter 7 would leave you owing.

7. Nondischargeable debts such as income taxes, back child/spousal support: Special debts which cannot be discharged in bankruptcy leave you at the mercy of those creditors just a few months after you file a Chapter 7 case. Those creditors—such as the IRS, and your ex-spouse and/or the state or local support enforcement authorities—often have the power to impose tax and support liens on your home, and potentially can even seize and sell your home to pay those liens. In contrast, a Chapter 13 protects you while you pay off those special debts in an organized plan, by preventing those liens from being placed on your home. By the time your Chapter 13 case is finished, those special debts are paid in full, never to threaten your home again.

8. “Statutory liens”: utility, ”mechanic’s”/”materialman’s,” and child support liens: If before filing bankruptcy you already have one of these involuntary liens imposed by law against your home, those liens would very likely survive a Chapter 7 bankruptcy. Because the “automatic stay” that prevents the enforcement of liens expires with the completion of a Chapter 7 case, these creditors would be able to threaten your home at that point. Instead, in a Chapter 13 the “automatic stay” continues throughout the three-to-five year case, again protecting your home while you satisfy the lien.

9. Judgment liens: Unlike the other nine items in this list, judgment liens can be avoided, or removed from your home’s title, in the same circumstances under Chapter 7 as in Chapter 13. A judgment lien can be removed if it “impairs” your homestead exemption, that is, if it encumbers the equity in your home that is protected by that exemption. The reason that I list it here is that this judgment lien avoidance can sometimes be put to extra good use in Chapter 13 when used in combination with one or more of these other 9, in a way which could not happen in Chapter 7. Let’s say for example that your home equity position would allow you to remove a judgment lien, but you are so far behind on your mortgage payments that you would lose your home to a foreclosure after finishing a Chapter 7 case. Your ability to remove that judgment lien from your home title would do you no good if you’re going to have your home foreclosed by your mortgage lender a few months later. It’s the Chapter 13’s ability to give you protected time to cure that mortgage arrears that gives practical value to your power to remove the judgment lien.

10. Preserve non-exempt equity: Home property values have declined so much in the last few years that most people thinking about bankruptcy do not have too much equity in their homes. That is, if there is any equity at all, it’s protected by the applicable homestead exemption, and therefore not at risk if you file a Chapter 7 case. But IF you DO have more value in your home than allowed under your homestead exemption, Chapter 13 can often protect it. You don’t run the risk of a Chapter 7 trustee seizing it to sell and pay the proceeds to your creditors. Instead, under Chapter 13 you can often either keep the home by paying those creditors gradually over the course of the up-to-5-year Chapter 13 case, or can sell the home yourself on your own schedule. Either way, Chapter 13 leaves you much more in control of the situation.

Each one of these ten Chapter 13 powers can solve a big problem so that you can keep your home. But they can have an especially dramatic impact when used in combination. In the next blog I’ll give some examples so that you see how these ten actually work, both separately and in combination.

 

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Business Litigation Worth Fighting About in Bankruptcy

The closing of your business, followed by your personal bankruptcy filing, often ends threatened or ongoing business litigation against you. But here are three situations where that litigation could well continue regardless of the bankruptcy.

What is No Longer Worth Fighting About

Most debts or claims against you at the time of your bankruptcy filing are resolved for all legal purpose by the filing of your bankruptcy case. Now there is no longer any benefit for the creditor to initiate previously threatened litigation or to continue the pending litigation. If you filed a Chapter 7 bankruptcy case, most if not all of your business and personal debts which you want to discharge will in fact be discharged. The creditors will either receive nothing or will receive a pro rata portion of any of your non-exempt assets. If you filed a Chapter 13 case, your creditors will receive whatever your court-approved plan provides, often pennies on the dollar of whatever you owe. There is usually not much worth starting or continuing to fight about.

What IS Worth Fighting About

But there ARE some types of debts or claims that DO still need court resolution. In these situations the creditor or adversary would likely get permission from the bankruptcy judge to either continue the pending litigation or initiate it.

1) Determining the Amount of a Debt

If a debt or claim is being discharged in a no-asset Chapter 7 case, the amount of that debt makes no practical difference. But in an asset Chapter 7 case, in which the bankruptcy trustee is anticipating a pro rata distribution of assets to the creditors, the amounts of all the debts need to be determined in order for that distribution to be fair to all the creditors. Same thing occurs in Chapter 13 cases in which the creditors are being paid a portion of their claims but not in full, since the amount of any allowed claim affects the distribution received by all the creditors.

Usually disputes about the amount of a the claims are resolved in bankruptcy court, by the creditor or trustee objecting to a proof of claim filed by the creditor. But in relatively complex disputes, especially ones already pending in another court, , the bankruptcy court may allow the amount of the debt to be resolved in that other court.

2) Potential Insurance Coverage of the Debt

If a claim against the debtor is potentially covered by insurance, then often all the affected parties want the dispute to be resolved. Issues needing resolution include whether the debtor is liable for damages, whether those damages are covered by the insurance, and whether the policy limits are enough to cover all the damages or instead leaves the debtor personally liable for a portion. Examples include:

• vehicle accidents involving the business’ employees or owners, especially those with multiple drivers

• claims on business equipment damaged by fire or flood

• various business losses potentially covered by your business owner’s policy, such as an employee’s embezzlement, or an injury to a non-employee on the business premises

In these situations the bankruptcy court will likely give permission for the litigation to proceed outside of bankruptcy court, with appropriate conditions about not pursuing the debtor for any amount not covered by insurance.

3) Nondischargeable Debts

The biggest fights about business-related debts arise when a creditor or claimant argues that its debt or claim should not be discharged in the bankruptcy case. This challenge goes to the heart of the bankruptcy case—the debtor’s desire to get a fresh start without being burdened any longer by the debts connected to the failed business.

These discharge fights apply to both Chapter 7 and Chapter 13. In the past, Chapter 13 did not allow creditors to raise many of the kinds of challenges to the dischargeability of debts allowed under Chapter 7. But the major 2005 bankruptcy amendments for the first time opened the door in Chapter 13 to many of those same challenges. Because Chapter 13 is often a better solution for debtors who have closed a business (for example, it is often a better way to deal with certain business-related debts such as nondischargeable taxes), in the last few years there have been a significant number of dischargeability challenges by creditors in Chapter 13.

 

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Getting a Handle on Your Income and Business Taxes Through Bankruptcy While Your Business Forges Ahead

Could your small business survive and even thrive if you could just get better terms for payment of your back tax debts?

The owners of just about every struggling sole proprietorship have income and business tax problems. When you are barely scraping by, needing every dollar to pay the absolutely necessary keep-the-business-running expenses, you can find yourself unable to scrape together the money to make your estimated personal income tax payments each quarter. If you have an employee or two, it can be all too tempting to use the withheld payroll tax money for some critical business or personal expense instead of paying it over to the IRS. So even when business improves, once you fall behind with your taxes it’s terribly difficult to catch up, to be simultaneously paying both your current and past tax obligations. This especially true considering accruing late charges and interest, which can greatly increase the amount you must pay to catch up.

Add to the mix the IRS’ limited flexibility on payment terms for back taxes, plus its extraordinary collection powers against you and against your business and personal assets, and it’s no wonder that back taxes are often the most urgent problem for a business owner trying to figure out what to do.

If your business is a sole proprietorship in your name, or in your name and that of your spouse, a Chapter 13 case would very likely give you a series of advantages in dealing with your past due tax liabilities, while allowing your business to continue to operate. (If your business is instead in the form of a corporation, or if your debt amount is larger than a certain threshold, you may not qualify for Chapter 13 but instead need to consider Chapter 11 or other options, a discussion which is beyond the scope of this blog.)

A Chapter 13 bankruptcy could help your business survive by significantly reducing both your business and personal monthly debt obligations, and the tax debts themselves as well as the rest of your debts. As for the back taxes:

• some of the taxes or penalties may be written off (“discharged”) altogether;

• payments on the remaining tax debts would usually be stretched out over a much longer period than the taxing authorities would otherwise allow, thereby greatly reducing the amount you would need to pay each month; and

• ongoing interest and penalties usually stop accruing, so that the payments you make pay the tax debts off much more quickly.

So Chapter 13 almost always gives you both immediate month-to-month relief easing your business and personal cash flow, and long-term relief reducing what you must pay before you are tax debt free, and completely debt free.

 

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Your Sole Proprietorship Business Rescued by Chapter 13

Do you have a small business in your own name that would be successful if it only got a break from its debts? A Chapter 13 case would likely greatly reduce both your business and personal monthly debt service while you continued to run your business.

Although Chapter 13 is sometimes called the “wage earner plan,” it is not at all restricted to wage-earning employees. In the Bankruptcy Code Chapter 13 is actually titled “Adjustment of Debts of an Individual with Regular Income.” That word “Individual” makes clear that a corporation cannot file under Chapter 13. But if you are a person who owns a business that is operated in your own name, or that of you and your spouse, then you and business are treated as a single legal entity. The business’ assets are just part of your personal assets; its debts are just part of your debts. This is true regardless if your business is operated under an assumed business name, as long as you have not gone through the formalities of creating a corporation, a limited liability company, or other separate legal entity for your business.

Here’s how Chapter 13 works to help your sole proprietorship business:

1) Chapter 13 deals with your business and personal financial problems in one package. In a sole proprietorship you are individually liable for all debts of your business, along with your personal debts. So as long as you qualify for Chapter 13 otherwise, you can simultaneously resolve both business and personal debts with that one option.

2) Stop both business and personal creditors from suing you and shutting down your business. The “automatic stay” imposed by the filing of your Chapter 13 case stops ALL your creditors from pursuing you, including both business and personal ones. Your bankruptcy case will stop personal creditors from hurting your business, and business creditors from taking your personal assets.

3) Keep whatever your business assets you need to keep operating. If you do not file a bankruptcy, and one of either your business or personal creditors gets a judgment against you, it could try to seize your business assets. Also, if you filed a Chapter 7 “straight bankruptcy,” under most circumstances you could not continue operating your business. However, Chapter 13 is designed to allow you to keep what you need and continue operating your business.

4) Keep critical business and personal collateral. If you are behind either on business or personal loans secured by either business or personal collateral, Chapter 13 will at least temporarily stop the repossession of the collateral, and often give you an opportunity to either lower the payments or at least have some time to catch up on your late payments. In certain limited situations—such as some judgment liens and some 2nd/3rd mortgages—the liens can be gotten rid of altogether. Overall, through Chapter 13 you are provided ways to keep collateral that you would otherwise lose, and often do so under much better payment terms.

5) Solve both business and personal tax problems. Business owners in financial trouble are often in tax trouble, which Chapter 13 addresses well. The program is designed so that at the end of a successful Chapter 13 case, you will have either written off or paid off all your tax debts and will be tax free.

 

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Income Tax Refunds in Chapter 7 Bankruptcy

Can you keep your tax refund if you file a Chapter 7 case? It’s mostly a matter of timing.

 

Here are the bullet points:

  • Everything you own at the time your Chapter 7 bankruptcy case is filed becomes your “bankruptcy estate.” Usually, most or all of that “estate” stays in your possession and you get to keep because it’s “exempt,” or protected.
  • That “estate” includes not only your tangible, physical possessions, but also intangible ones—assets you own that you can’t physically touch—such as money owed and not yet paid to you.
  • Depending on the timing, a tax refund can be an intangible asset that becomes part of your bankruptcy estate. Then whether you can keep it or not depends on whether it is exempt.
  • Because an income tax refund usually consists of the overpayment of payroll withholdings, the full amount of that refund has accrued by the time of your last payroll withholding of that tax year. So even though nobody knows the amount of your refund until your tax return is prepared a few weeks or months later, for bankruptcy purposes it is all yours as of the very beginning of the next year.
  • So if you file a Chapter 7 case after the beginning of the following year and before you have received your tax refund, it is part of your bankruptcy estate and the trustee can keep it if it is not exempt, or can keep as much of it as it not exempt. That’s also true if you have received the refund and not done anything with it.
  • You can avoid this by filing your tax return and receiving and appropriately spending the refund before your Chapter 7 case is filed. DO NOT do this without very specific advice from your attorney. The bankruptcy system is very interested in what money you receive and precisely how you spend it before filing bankruptcy, and you can very easily get into trouble if this is not all done very carefully.
  • If the bankruptcy is filed so that the refund is an asset of the bankruptcy estate, whether or not it is exempt depends on how large it is and how much of an exemption is allowed in your state. In some cases, using all or part of an exemption for the tax refund may reduce the availability of the exemption for other assets.
  • Some states have specific exemptions applicable to certain parts of the tax refund, or laws that exclude them from the bankruptcy estate altogether, particularly regarding the Child Tax Credit or the Earned Income Tax Credit. These likely do not exist in a majority of the states, but it’s worth checking.  
  • Even if the refund, or a portion of it, is not exempt, the Chapter 7 trustee may still NOT claim it if he or she determines the amount is not enough to open an “asset case.” That is, the amount of refund to be collected is so small that the benefit of distributing it to the creditors is outweighed by the administrative cost involved. You might hear a phrase similar to the amount being “insufficient for a meaningful distribution to the creditors.” This threshold amount can vary from one court to another, indeed from one trustee to another, so be sure to discuss this with your attorney. But note that if the trustee is collecting any other assets, then most likely he or she will want every dollar of tax refunds that are not exempt.
  • There is a risk that you will not be able to claim an exemption if you don’t list the tax refund to which the exemption applies. So be sure to always list any tax refund to which you may be entitled.
  • Although I’m focusing on this issue now because we are in tax season, the same principles apply year-round. Frankly, it can be a little harder to wrap your brain around this as applied to, say, filing a bankruptcy in the middle of the year. As of July 1, you’ve had a half-year of tax withholdings deducted from your paychecks and forwarded by your employer to the taxing authorities. So, assuming the same amounts were withheld throughout the year, if you end up getting a substantial refund the following spring, for bankruptcy purposes about half of that had accrued by mid-year. So a bankruptcy filed on July 1, needs to take that into account. Some Chapter 7 trustees don’t push this issue much until the last quarter of the year, when that much more of the refunds have accrued. But regardless, tell your attorney about income tax refunds anticipated the following year, particularly if you have a history of relatively large tax refunds.

 

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Why Chapter 13 is So Nifty

Chapter 7 is short and sweet and to the point. It often gets what you need—a discharge (a legal write-off) of all or almost all of your debts. But in SO many situations, Chapter 13 gives you so much more.

 In my last blog I showed a simple Chapter 13 case works. In my example, two debts that cannot be discharged in a Chapter 7 case—a recent IRS income tax debt and some back child support—were conveniently paid over time by the debtor through a Chapter 13 case, while that debtor was protected from those two particularly aggressive creditors. Chapter 13 buys time and protection that Chapter 7 simply isn’t designed to provide.

Here are just a few of the other extras that come with Chapter 13.

1. You can keep your possessions that are not “exempt,” instead of allowing a Chapter 7 trustee to take them from you. Retain much more control over the process compared to trying to negotiate payment terms with a Chapter 7 trustee. With Chapter 13 you have 3 to 5 years to pay for the right to keep any such possessions, instead of only the few months that the Chapter 7 trustees generally allow.

2. If you are behind on your first mortgage, you have 3 to 5 years to catch up on this arrearage, instead of the few months that a mortgage holder generally allows.

3. You can get a second or third mortgage off your home’s title, and avoid paying all or most of such mortgages, if the value of your home has slid to less than the amount of the first mortgage. You can’t do this in a Chapter 7 case.

4. If you bought and financed your vehicle more than two and a half years ago, then your vehicle payments, interest rate, and even the total amount to be paid on the loan can often be reduced through Chapter 13. This can enable you to keep a vehicle you could otherwise no longer afford. In Chapter 7 by contrast, you are usually stuck with the contractual payment terms.

5. In the same situation—a 2 and a half-year or older vehicle loan—if you are behind on the vehicle loan payments, in a Chapter 13 you don’t have to catch up those back payments. But in a Chapter 7 you almost always must do so.

6. If you owe an ex-spouse non-support obligations, you can discharge those in a Chapter 13 but not in a Chapter 7. These usually include obligations in a divorce decree to pay off a joint marital debt or to pay the ex-spouse for property-equalizing debt.

7. If you have student loans, with Chapter 13 you may be able to delay paying them for three years or more, which can be especially valuable if you have some other debts that are critically important to pay (such as back child/spousal support or taxes). And if you have a worsening medical condition, this delay may buy time until you qualify for a “hardship discharge” of your student loans.

Straight Chapter 7 bankruptcy if often exactly what you need to get a fresh financial start. But one reason you need to talk with an experienced bankruptcy attorney is that sometimes Chapter 13 can give you a huge unexpected advantage, or a series of lesser ones, which can swing your decision in that direction. (There are others beyond the main one listed here.) My job is to give you honest, unbiased, and understandable advice about these two options—or any other applicable ones—so that you can make the very best choice. Give me a call.

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Getting a Fresh Start for the New Year

You’ve fallen behind with your creditors or are just about to. You’re anxious, trying to avoid thinking about it, angry that life is so tough, trying to build up the courage to face up to the realities. You wonder whether you really have any decent options, how to figure out the best one and make it happen.

 In these blogs I get into all kinds of twists and turns about how bankruptcy works. That’s because life comes with complications, and the law has evolved to address them. But now at the start of the new year, let’s get down to basics.

You’re financially in over your head. You don’t know what to do, or where to get help. To get started, you need 1) some general information and then 2) some personal advice.

1) General Information:

Different people get information differently about something important like what do about their finances. Some are more comfortable scouring through the internet. There is a wealth of information here, at all levels of sophistication. Some prefer to go to the library, or get a how-to manual or book through a bookstore or sources like Amazon.com. Some like to talk things over with trusted friends or relatives. Common sense says you have to be very cautious about all sources of information, always considering the reliability and accuracy of the source. And always remember that general rules, even if they are true, can have exceptions or may not apply to your situation for some reason. At this point you are just trying to get broadly informed about your options, and their possible advantages and disadvantages. You’re holding back on making any final judgments about which option is best because you know that the information you’re gathering is incomplete and may or may not match your own unique situation.

People are different about how much information they want to pull together before starting to act on it. Some like to do a bunch of research before going to see an attorney, others are more comfortable skipping that and just going straight to the attorney. As you can guess, I meet with people from one extreme to the other, and everything in between. So just do what feels right to you, because I can accommodate you.

2) Personal Advice:

People considering bankruptcy can be reluctant to talk with an attorney for lots of reasons. Based on my extensive experience, here are some that don’t hold water.

  • “If I see an attorney, he or she will make me file a bankruptcy”:  An attorney is legally and ethically obligated to represent YOU, and to lay out your options honestly, in an understandable way so that YOU can make an informed choice. It’s not my job to make you do anything, certainly not to file bankruptcy. Certainly I’ll tell you if you do not qualify for any particular option. And I’ll advise you why I think certain options look more advantageous than others, and may well make a strong recommendation towards a certain option. But the choice is yours.
  •  “I’m not really ready to see an attorney yet”:  There is virtually no downside to getting advice early in the process and there are many ways to hurt yourself by getting it late.  It is extremely common for people to come in to see me after they have already acted (or failed to act) in ways that were against their best interest. If on the other hand they see me earlier than necessary, they still get good advice on what they should do in the meantime and they start a relationship with me in case they want to or need to work with me later.
  • “I don’t think I can afford an attorney, and I don’t even know if I need one”:  You may be able to file a bankruptcy by yourself, or take some other appropriate action, but wouldn’t it be good to find out whether in your situation you can or should do so? My job is to give you unbiased, straight talk about your options, including what you can do on your own, how much my services would cost if you decide to hire me, and how that could be paid. There may be ways that you can afford my fees that you did not expect. We won’t know until we explore your options.
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