By Ryan C. Wood
There should not be much of a downside when filing for bankruptcy protection under most circumstances. Your real-life circumstances are the problem and created the negatives in your current life. Bankruptcy should do nothing but improve your life. The problem is not what comes after filing for bankruptcy protection and receiving a discharge of your eligible general unsecured debts. The Bankruptcy Code is the law and designed to help you in your greatest financial need. If you qualify to file for Chapter 7 bankruptcy protection and need the relief the Bankruptcy Code provides there should be no downside of filing bankruptcy. Of course, it depends upon your individualized circumstances.
Of course, there are exceptions to every rule and circumstances do vary widely. For most bankruptcy filers the amount of debt became too much overtime and then some life events happened requiring more money each month to just live. A physical or mental limitation reducing monthly income. When everything at the Dollar Store now costs $1.25, but they still call themselves the Dollar Store. Good one. American retail, where even the store name can be a lie. It is like magic.
Your credit score usually is already shot when seeking the advice of a bankruptcy attorney. The filing of the bankruptcy case is not going to lower the credit score at that point. The legal discharge of your eligible general unsecured debts will be nothing but good for you and your family. Think about just worrying about your monthly living expense without credit card, payday, or personal loans? Can you imagine that? What is the downside to that picture?
A DOWNSIDE TO FILING BANKRUPTCY IS STUDENT LOANS ARE GENERALLY NOT DISCHARGEABLE
In 2005 Congress, paid for by the major multi-national conglomerate credit industry, took all students loans off the table to be discharge unless an undue hardship can be proven pursuant to Section 523(a)(8). What is an undue hardship? Why ask any bankruptcy attorneys about it? Of course, undue hardship was not defined. So naturally humans that do not know what financial struggle is created a three-part test to determine if a student loan is an undue hardship and dischargeable. This is about as subjective as subjective can get and it is horrible. Spoiler alert, it is very difficult to prove you have no money for student loans, and all the student loans should be discharge, when your cellphone bill is $150.00 a month. Or you cable bill is $200.00 a month without internet. You get the picture. You got something for the student loans each month.
A DOWNSIDE TO BANKRUPTCY IS BANKRUPTCY FAILS TO DEFINE IMPORTANT TERMS
The Bankruptcy Code is a wonderful set of laws allowing you to try and hit that homerun over and over again with a safety net to fall in when things do not work out as planned. Sadly the Bankruptcy Code fails to define many important terms. If you add a term like “undue hardship” tells us what you mean when adding the term. Please amend Section 101 of the Bankruptcy Code and define all of the important terms. Bankruptcy filers do not have the money to pay for expensive appeals to have a Bankruptcy Code interpreted in favor of those filing……
A DOWNSIDE TO FILING BANKRUPTCY IS ONLY THE LIMITATIONS CREATED BY LAW
So there are limitations to getting rig of all of your eligible debt discharge. You cannot discharge secured debts without giving up the collateral, a house or car, and certain debts by law are not dischargeable. These are called priority general unsecured debts like recent unpaid taxes, domestic support obligations, or certain government debts and fines.
You can keep so much asset value when discharging your debts. There are different categories of assets like household goods, clothing, jewelry, vehicles, equity in a home, tools of trade and on and on. Exemptions protect your assets from being liquidated for the benefit of your creditors. There are Federal Exemptions and each state can opt-out of the Federal Exemptions and created their own. In California we have two sets of exemptions and there are caps on the various categories. Under the California CCP 703 exemptions the vehicle exemption totals $5,850.00. The California CCP 703 exemptions also has a wildcard exemption totaling over a little over $30,000.00; which can be applied to any asset like bank account money.
YOU ARE NOT BAD OF LESS THAN WHOLE FOR FILING BANKRUPTCY
This is our simple easy world in the United States these days. There are many humans that have no clue about financial struggle now. What do I mean my financial struggle? I will share part of my life. If you sold baseball cards to pay for basketball shoes at age 15, raked leaves, had a paper route before you were 11 years old, you probably know some financial struggle. If you started working 20 plus hours a week at age 16 during high school, you probably know some financial struggle. If you paid for your college and law school yourself, you probably know some financial struggle. If you have lived off credit cards you have lived with financial struggle. If your clutch goes out on your Hyundai Excel so you have to ride your bike you purchased with paper route money 8 years earlier to work, college, the store, everywhere for years you know financial struggle. If you have played the 0% balance transfer game to save money to not pay interest, you know financial hardship.
So there are many poor people that never actually experienced financial hardship. Their parent experience financial hardship and bankrupted themselves to make sure their children have everything they did not. Even when they cannot afford it. How to spend money that is now enough to get it done each month.
Various humans in the world will say you a bad. You are not bad. Simply a human that did the best they could in the moment and the world around you determined your result. You may have done nothing wrong. Wrong place wrong time is real and you have no control over the outcome………
