I grew up in a family where bankruptcy was a bad word. But, over the past 19 years, I and my law partner have helped more than 10,000 folks in Southwest Virginia get a fresh start by filing bankruptcy. In today’s world, bankruptcy is not a bad word and can be, in fact, a life saving tool in the fight against mega-creditors who seem to have all the power (and sometimes the law) on their side.
My parents ran a small weekly newspaper and print shop and I recall them talking at the dinner table about folks who owed them money for advertising or printing for which they would never be paid since those folks filed bankruptcy. Those bankruptcies had a direct financial impact on whether I got a new bike or not.
Dinner table conversations are different for my children. They live with two attorney parents who help folks file bankruptcy daily. They have a different view of bankruptcy because they live in a different economic world. They recognize it a tool that helps even out the playing field for the many folks who find themselves in financial distress and with few to no options. In short, they know that bankruptcy is not a bad word.
My dinner table recollections come from a time when local businesses ran credit accounts for their customers and few folks owed on credit cards. Heck, at that time the mortgage on your house was actually held by the local bank whose loan officer lived down the street from you. You did not open your mail box to find the constant barrage of credit solicitations that have become so prevalent in the past 10 years – your mortgage was not sold and securitized and packaged up for investors — nor did you have the financial uncertainly that many folks face these days.
Over the next few months, I’ll address the different types of bankruptcy, non-bankruptcy options and also write about common mistakes folks make that can lead them to end up needing bankruptcy.
No one actually wants to file bankruptcy. I see folks weekly who just need advice about other alternatives. Some folks need advice about spending habits, some folks may need to recognize they simply cannot afford to keep the large home now the kids are gone and income is reduced. But other folks are grasping at false solutions that damage their credit as much as bankruptcy and give them no substantial relief from the stress of debt overload.
The bankruptcy laws were created so that our citizens don’t live under oppressive debt loads and have a basis as far back as the Old Testament where debts were forgiven every 50 years in the book of Leviticus and every seven years in Deuteronomy. The right to file bankruptcy has been around almost since the founding of our nation. In fact Article 1 of the United States Constitution sets out the authority for bankruptcy laws. Many of the country’s esteemed citizens have taken advantage of those bankruptcy laws or debt relief laws from Milton Hershey to Henry Ford and Walt Disney. Even Virginia’s own Thomas Jefferson struggled throughout his life with substantial debt issues due to a multitude of factors, including overspending and co-signing an obligation for a friend who did not pay.
For many folks, asking for help or even considering bankruptcy feels shameful and wrong. It is tough for folks to look at it as the financial tool or remedy that it is as they often feel responsible for their own situation. They look at economic failure as moral failure. But many times, especially in the last few years, we have seen the finances of so many people swept away by economic storms that few could have imagined. People who have worked hard their whole lives have lost their jobs because of the closing, downsizing, or outsourcing many once stable companies have gone through. And those jobs are hard to replace. Not to mention the impact of sickness or divorce.
We have seen some of the largest corporations in America file bankruptcy or avoid bankruptcy only by being bailed out. Most of the time being bailed out is not an option for a regular person. But the bankruptcy laws that protect individuals are still there.
So, for a girl who learned bankruptcy was a bad word at the dinner table, I’ve done a 180. It is not for everyone – people who can pay their bills should do so. But when the time comes that they can’t, there must be an alternative. There must the opportunity for people to shed or restructure debt they have no hope of fully repaying. There must be the hope of getting a fresh start and going on to a productive life without an overwhelming burden of debt. After all, would we really be better off without Ford trucks, Hershey Kisses, and Tinker Bell?
Malissa Giles received the Platinum ranking as top attorney in Roanoke Valley as recognized by readers of The Roanoker in 2012 Best of Roanoke. (May/June 2012 issue.) You can reach her at 981-9000 or [email protected].
