Immutable Precepts Affecting People In Trouble
Maybe one of the biggest reasons people file is simple bad luck. There is no rhyme or reason to it, but there are several immutable laws which, I have concluded, kick in when someone has money trouble:
First, when a person is under fire, the hecklers come out of the woodwork. It is almost engrained into our primordial tribe. Some among us sense the wounded prey, and join the hot pursuit. Collectors fill this role neatly.
Secondly, and this one is weird, when the chaos starts to kick in, watch out for physical injury from a crazy direction. A big tough contractor I was representing years ago, going through a divorce and difficult business times, got physically beat up by three women in the parking lot of a convenience store for mouthing off. The cosmos alone holds the reason why.
Thirdly, people with money trouble are often people who are flat out of luck.
I once represented a woman named Pam, a waitress, who had staggering debt relative to her earnings. Pam was at an age where she should have been thinking about retirement. As with many older people, she had gone into debt mainly to help her children, using her good credit to run up charges on multiple credit cards. She carefully made payments on each for a long period of years, conscious that if she did not, her credit would be ruined. A fortune could be made by someone who designed a truly honest program to calculate what the payment of minimums achieves over a period of years. Most often the original principal debt has been repaid long before minimum payments will ever address the interest.
In any event, she also took care of her own elderly mother at her home. She had worked her whole life and was obviously going to keep working for a long time.
Over a period of a year I helped her manage her finances and avoid bankruptcy. She was always tired when she came to see me, and always had a new story of a family crisis or event with which she simply had no choice but to help.
Finally, after trying hard to avoid a bankruptcy filing, and after a number of missed appointments, we sat down and carefully completed the stack of papers needed to complete a Chapter 7 Bankruptcy case. Her paperwork showed that she was flat broke, with no equity in anything.
We filed the case. Several days later, Pam called me in tears. Her Mom had died.
A week after that, she called me to tell me her Mom had named her as beneficiary on a $75,000 annuity. My client never knew it existed.
The Bankruptcy Code permits a debtor to keep (claim as "exempt") certain dollar values of property. The value of the annuity far exceeded any exemption she could claim. The Court and the Code require that a Debtor disclose all assets of every kind and nature under oath, so we had no choice but to disclose the asset by amending her paperwork.
Pam had a hard time understanding why this annuity would now have to go to pay bills which normally would have been discharged in the bankruptcy, but eventually, she got it. The right thing to do was to turn the money over to the Trustee to pay her bills. To do otherwise would have been Bankruptcy Fraud, a federal crime.
I filed a motion to dismiss her case voluntarily, and argued that with this sum of money, I could settle her claims at substantial discounts, that her circumstances had changed, and that she never would have filed had she been aware of this money.
The Court was sympathetic and understood my argument, but the law, which requires full disclosure and relinquishment of "non exempt equity", was obviously against my position.
We walked out of the courthouse where she thanked me for trying. The money would go to pay her bills, which was objectively fair, but Pam’s one chance at ever having more than subsistence means was gone forever.
Bankruptcy is truly at the other extreme from doing nothing. Although bankruptcy is as a rule a terrible experience, and should always be a last resort (though truly at times the only choice). If you are thinking about it, you should read all you can about relief under the United States Bankruptcy Code. Before you ever go to a lawyer you should understand all of the basics.
Credit Card Debt's Junky Road, click to view on Amazon
Maybe one of the biggest reasons people file is simple bad luck. There is no rhyme or reason to it, but there are several immutable laws which, I have concluded, kick in when someone has money trouble:
First, when a person is under fire, the hecklers come out of the woodwork. It is almost engrained into our primordial tribe. Some among us sense the wounded prey, and join the hot pursuit. Collectors fill this role neatly.
Secondly, and this one is weird, when the chaos starts to kick in, watch out for physical injury from a crazy direction. A big tough contractor I was representing years ago, going through a divorce and difficult business times, got physically beat up by three women in the parking lot of a convenience store for mouthing off. The cosmos alone holds the reason why.
Thirdly, people with money trouble are often people who are flat out of luck.
I once represented a woman named Pam, a waitress, who had staggering debt relative to her earnings. Pam was at an age where she should have been thinking about retirement. As with many older people, she had gone into debt mainly to help her children, using her good credit to run up charges on multiple credit cards. She carefully made payments on each for a long period of years, conscious that if she did not, her credit would be ruined. A fortune could be made by someone who designed a truly honest program to calculate what the payment of minimums achieves over a period of years. Most often the original principal debt has been repaid long before minimum payments will ever address the interest.
In any event, she also took care of her own elderly mother at her home. She had worked her whole life and was obviously going to keep working for a long time.
Over a period of a year I helped her manage her finances and avoid bankruptcy. She was always tired when she came to see me, and always had a new story of a family crisis or event with which she simply had no choice but to help.
Finally, after trying hard to avoid a bankruptcy filing, and after a number of missed appointments, we sat down and carefully completed the stack of papers needed to complete a Chapter 7 Bankruptcy case. Her paperwork showed that she was flat broke, with no equity in anything.
We filed the case. Several days later, Pam called me in tears. Her Mom had died.
A week after that, she called me to tell me her Mom had named her as beneficiary on a $75,000 annuity. My client never knew it existed.
The Bankruptcy Code permits a debtor to keep (claim as "exempt") certain dollar values of property. The value of the annuity far exceeded any exemption she could claim. The Court and the Code require that a Debtor disclose all assets of every kind and nature under oath, so we had no choice but to disclose the asset by amending her paperwork.
Pam had a hard time understanding why this annuity would now have to go to pay bills which normally would have been discharged in the bankruptcy, but eventually, she got it. The right thing to do was to turn the money over to the Trustee to pay her bills. To do otherwise would have been Bankruptcy Fraud, a federal crime.
I filed a motion to dismiss her case voluntarily, and argued that with this sum of money, I could settle her claims at substantial discounts, that her circumstances had changed, and that she never would have filed had she been aware of this money.
The Court was sympathetic and understood my argument, but the law, which requires full disclosure and relinquishment of "non exempt equity", was obviously against my position.
We walked out of the courthouse where she thanked me for trying. The money would go to pay her bills, which was objectively fair, but Pam’s one chance at ever having more than subsistence means was gone forever.
Bankruptcy is truly at the other extreme from doing nothing. Although bankruptcy is as a rule a terrible experience, and should always be a last resort (though truly at times the only choice). If you are thinking about it, you should read all you can about relief under the United States Bankruptcy Code. Before you ever go to a lawyer you should understand all of the basics.
Credit Card Debt's Junky Road, click to view on Amazon