In years past, bankruptcy filings were mainly due to a loss of job, a loss of health or a  loss of spouse due to death or divorce. This year Bankruptcy filings have doubled in our district. This increase in filings is in large part due to the unemployment rate, housing industry, high fuel prices and the economy in general.
The folks I come into contact with are extremely proud. They work hard, pay taxes, raise families and pay their bills. They are extremely proud.  Given the rise in bankruptcy filings they word of mouth has gotten out and people are more apt to be proactive than they were in the past. Often times they will consult with a lawyer and have high credit ratings have not missed a payment on credit cards, mortgages, medical bills or other debt. They know they are walking a tight rope though and the bottom is soon going to fall out. The debtor wants to pay their bills but will not hang on for very long. They may have exhausted their IRA’s. Retirement funds, children’s college funds, liquidated all their assets and fear the worst-they will miss that first faithful payment to a creditor. The creditors will begin to call them, default notices will arrive in their mailbox, a process server will deliver a summons to their front door and they will end up in Court. Some fear jail.
They want to know how the foreclosure process works, what to expect, can they stay in their home? How long until they must leave?
Our Forefathers wrote the US Constitution with the intent not to have debtor’s prisons. Bankruptcy is a remedy afforded to us when there is no alternative. Nobody wants to file a Bankruptcy; it is used as a last resort. Life is a marathon and we never know what will hit us. A loss of job, illness, divorce or foreclosure can send someone into financial ruins and psychological despair. People want to know the ‘rules’. What assets can they protect? What debts are non-dischargeable? Where do they turn? What do they pay or not pay? What is a summons? Should they or should they not pay their credit cards? What do they tell their creditors? Must they appear in Court for hearings? What is legal and what is not? What is ethical and what is not? Do they pay their property taxes even if they have to let their home go? What is a judgment and what are the consequences?
Most people who are filing bankruptcies today have fallen prey to the economy and the housing market. It is a vicious cycle. They rob Peter to pay Paul by living off their credit cards and taking cash advances until the market turns. Some wait until the credit cards are cut off and the well is dry. Others are proactive and do not want to wait until that point. They want to plan and time things accordingly. They want to do the right thing and protect themselves at the same time.