When people are thinking of bankruptcy, most often, they have tried everything else. They tried to consolidate bills; they tried to call their creditors to work out a payment plan. They borrowed all they could from their friends and family. They withdrew all of their money from their retirement plans. They are “at the end of the rope”. In the 20-plus years that I have been helping people with their financial problems, I’ve heard people try to do anything rather than file for bankruptcy.
Bankruptcy is a legal way to “start fresh”, and eliminate debt. The U.S. Congress put this system into place to avoid having “debtors’ prisons” as existed back in old England. There still is a big stigma in some peoples’ minds to filing for bankruptcy. Is it moral to “stiff” your creditors? In some ways, it is contrary to everything that we are taught when we start out in the adult world. As an adult, you make promises, like this, a promise to pay. But, what if you can’t keep that promise? Is it moral to not pay? That is a decision for each person to make. Some cultures and religions have prohibitions, or customs that say you cannot file for bankruptcy. Others do not. Bankruptcy’s origins, however, are in the Hebrew Bible which gave freedom from debts every seventh year.
One of the reasons that a bankruptcy system is needed is because in capitalism, people borrow money. Banks and other lenders take calculated risks on lending the money, because they figure out that some people won’t be able to pay them back. But, when they balance the risks with the reward (high interest rates that they collect!), they figure they will make money in the long run. By the time people consider talking to a bankruptcy lawyer, they have usually been struggling to pay their debts for a long time. And, to top it off, once they miss a payment on one debt, or are late, the interest rates on their other debts go up.
If you are struggling with this and other financial or moral questions, call us, we can help you sort it out.
Daniel J. Winter
BankruptcyLawChicago.com
312-789-9999
Offices in Chicago, Gurnee, Oak Lawn, and Skokie
