If you’re thinking about bankruptcy, I’m sure you’ve been doing quite a bit of reading about it. And I’m sure that you’ve come across some things that make you wonder if bankruptcy is a good idea. As I’ve written of before, not everyone has a high opinion of people who use the bankruptcy laws to get a fresh start.
I wonder if those people have ever been to a meeting of creditors. I wonder if they have ever talked to someone who had to file bankruptcy because they’ve run out of unemployment benefits. I wonder if they have ever talked to someone who had to file bankruptcy because they had medical bills that their health insurance didn’t cover. I wonder if they have ever talked to someone who has gone through a divorce and was trying to make ends meet on a single income.
I sat in a meeting of creditors the other day listening to some debtors tell their stories. As the trustee asked his questions, I could see in my mind the events unfold that led the debtors to bankruptcy. One woman was widowed. Her husband had left her with a mountain of joint debt, yet he had no life insurance policy with which to help her pay those bills if anything happened to him. She simply could not pay her bills and feed herself. What options did she have besides bankruptcy?
I started wondering what those people who believe that bankruptcy is stealing would like to see happen to people who declare bankruptcy. Imagine there was no bankruptcy. Imagine instead that creditors could not be stopped. They could get their judgments and garnish your paycheck. In Colorado, they can get 25% of your take home pay. That’s a huge chunk. If you’re just getting by, where does that 25% come from? Rent? Food? Transportation? Will you be driven to despair by feeling like you could never get ahead? Once one creditor is done garnishing you, will another start?
In a world without bankruptcy, will debtors be forced into unemployment and onto government rolls for financial assistance? Will the people who believe bankruptcy is stealing be satisfied then? Will they be happy when they realize it is their tax dollars supporting these debtors?
Our Founding Fathers had the wisdom to include bankruptcy in the Constitution. It is a decision that no client of mine has ever wanted to make, but each of them is grateful for it. Especially when you take the time to think of what the other options are.