BANKRUPTCY SUCKS! Right? Well … compared to what?

Bankruptcy is not high on anyone’s “bucket list”!  In fact, bankruptcy downright sucks, right?

Well, compared to sleepless nights, physical and emotional illness, or loss of a valued relationship, maybe not so much, eh?  If you can’t bear to hear the phone ring, let alone to answer it, if you know the local process servers by sight if not by name, if you have a mountain of unopened bills that you know you can’t pay, maybe then bankruptcy sucks a bit less.

Fill a hole or build a castle?  Let’s make a dubious assumption:  You have enough income to pay off all of your debts and provide for your and your family’s needs for the next five years.  (It’s a dubious assumption because if nothing else you will be dealing with the stress of fighting off your creditors and their collection agencies and attorneys.)  Let’s further assume that you owe a total of $20,000.00 in unsecured debt, and that interest on that debt will be adding up at a rate of 10%.  You’re going to pay an average of about $420.00 per month for each of the 60 months during that five years.  At the end of the five years, you have filled that $20,000.00 hole, and all you have to show for it is a filled hole.  Assuming, again, that you in fact have the $420.00 per month over and above your reasonable living expenses, what if you instead invested the money?  Well, then at the end of the five years you would have (again assuming 10% interest) $32,910.76!  Even with NO interest you’d have $25,200.00.

How do you want to spend the next five years:  Filling a hole (and trying to survive the stress) or building your castle?

So, bankruptcy sucks?  I don’t think so.

Thanks for your time and interest!

Mark Emmett, Consumer Bankruptcy Lawyer

Member National Association of Consumer Bankruptcy Attorneys

Dave Ramsey, Bankruptcy Survivor!

Recently, Dave Ramsey reportedly devoted nearly his entire nightly talkshow to talking down bankruptcy.

Personally, I LIKE Dave’s general approach to credit and money management.   If you apply and do what he says, you’re way ahead of the average bear.  But, he’s just plain overboard in his anti-bankruptcy zeal.

You see, Dave Ramsey was the victim of a real estate crash many years ago, and found himself with assets worth about $1,000,000 and debts in excess of $4,000,000! I don’t know for sure why he delayed the inevitable bankruptcy filing for so long, but about two years later he did file, received the discharge of his debts, and was able to move on with his personal and business lives to be the success he is today. Could he have done this WITHOUT bankruptcy? Probably not.

This afternoon, looking for more detail about Dave’s bankruptcy filing, I ran into this poston the DebtFREE-Revolution blog:  dave-ramsey-a-hypocrite.  Since I can’t leave a comment there, I’ll do it here:

The mistake that Mr. Ramsey made was not filing his case sooner. He would have prevented the irrational (but clearly very real) anguish he and his wife suffered trying to fill a hole (massive debt) rather than getting on with the fresh start bankruptcy can provide. It wasn’t necessarily the bankruptcy that was so gut-wrenching, it was the (all too common) attempt to maintain his pre-failure self-concept, which, due to no real fault of his own, was incompatible with the results of nasty market forces beyond his control (gee, can someone say 2008-2009??). Dave Ramsey would not be the person he is or where he is today without the fresh start of bankruptcy.

New York consumer attorney Jay Fleischman adds his two cents here: why-dave-ramsey-hates-bankruptcy

In light of Jay’s mention that filing “bankruptcy is listed in the top five life-altering negative events that we can go through, along with divorce, severe illness, disability, and loss of a loved one,” it’s clearly not to be misused.  However, dissuading someone who would benefit from bankruptcy, and whose situation can not be resolved without it, from filing and getting a fresh start in life, has far greater negative consequences than the occasional unnecessary filing.

Thanks for your time and interest!

Mark Emmett

Utah Bankruptcy Attorney, Member National Association of Consumer Bankruptcy Attorneys

What the heck IS bankruptcy, anyway?

Bottom line:  A safety net and magic resurrection machine.

No one wins when an otherwise productive, contributing member of society is essentially disabled by their temporary inability to keep up with their debts.

So, Congress has, through the Bankruptcy Code, established procedures to give a fresh start and second chance to those who would might otherwise simply “drop out” of life as it could and should be.  This benefits the bankruptcy debtor and his or her specific creditors and the economy at large, as I’ll explain below.

If you’re unable to pay your debts, what typically happens?:

• Your productivity and creativity (not to mention your mental and physical health and personal relationships) suffer under the stress of fighting off creditors and their collection agencies and lawyers.
• You are consequently unable to give proper attention to your work and personal life.
• Not only are you unable to pay your current debts, you’re almost certainly not able to incur new debt or to purchase new products and services.  The economy stagnates [see, for example, 2008-2009(?)].

CONCLUSION:  You are one sick puppy who can’t find your mom, let alone run with the pack any more.

Enter bankruptcy:  Once relieved of the impossible burden of your past debt load, you’re able to give proper attention and effort to your life again, and your creditors and the overall economy benefit because you’re once again able to be a consumer of their products and services.

If you really need to file, bankruptcy is truly a win-win proposition.

Thanks for your time and interest!

Attorney Mark R. Emmett

Consumer Bankruptcy Lawyer and Advocate Since 1978

Member National Association of Consumer Bankruptcy Attorneys

Bankruptcy Basics

Here’s a great resource for the basics.

http://www.bankruptcylawnetwork.com/bankruptcy-basics/