Bankruptcy and the Holidays: Merry Christmas!

Christmas and bankruptcy have some surprisingly similar themes: somebody DOES really care about your misfortune, and life CAN be better.

 

Our blog posts are read by people of every religion and belief system, and we are certainly sensitive to that. However, most people would agree that every religion has something worthwhile that everybody could learn from. Indeed, the major religions have a lot in common. For example, all have some form of The Golden Rule: do unto others as you would have them do unto you.

The Heart of Christmas

Christmas has some things to say which span many religions: God cares about humanity, decided to give us some help, and as a result if we choose to we can live more joyful lives.

The Heart of Bankruptcy

Similarly, somebody DOES care about your financial plight, significant help is very likely available, so if you choose to get that help you can live a better life.   

WHO Cares about My Financial Life?

If you have been dealing with financial difficulties for a long time, you may have gotten to feel very alone. So who cares about your plight? Two sets of people who probably wouldn’t come right to mind.

Those Who, Over Time, Created the Option of Bankruptcy

First, the American bankruptcy system is a result of hundreds, or even thousands, of years of history, all culminating in what is today a relatively fair and progressive process for giving you relief from the oppressive burden of your debts.

Bankruptcy at its essence comes from Judeo-Christian theme of forgiveness, specifically the forgiveness of debts:

Every seventh year you must cancel all debts. This is how the cancellation is to be handled: Creditors will forgive the loans of their fellow Israelites. They won’t demand repayment from their neighbors or their relatives because the Lord’s year of debt cancellation has been announced. Deuteronomy 15:1–2.

The U.S. bankruptcy laws came directly from English laws, which first referred to the procedure in the mid-1500s. But those laws were designed not to give relief to debtors but rather simply to give creditors a tool to collect their debts. There was no discharge of debts, only creditors could start a bankruptcy proceeding, and only merchants could become bankrupt (since only they could legally borrow). Debtors (who were called “offenders”) could have their homes broken into to seize their assets, and under some circumstances could have their ears cut off. Debtors convicted of fraud were subject to the death penalty.

At the beginning of the history of the United States, the Articles of Confederation did not provide for a national bankruptcy law. But the Constitution did so, giving power to Congress to “pass uniform laws on the subject of bankruptcies.” However, during the first half of our history most of the time there was no federal bankruptcy law in effect: each of the three times that a bankruptcy law was passed during the 1800s it was repealed within a few years.  Then finally Congress passed the Bankruptcy Act of 1898, which lasted 80 years.  Under this Act, most debts became dischargeable, creditors no longer had to be paid a certain minimum percentage of their debts, and no longer could withhold their consent to the debtor’s discharge. A major revision in 1938 in response to the Great Depression added the “chapter XIII” wage earners’ plans, the predecessor to the current Chapter 13.

The 1978 Bankruptcy Reform Act created the Bankruptcy Code, the result of a decade of study and debate. It has been amended every few years since then, most significantly in 2005.

In general, over time the law has been benefitted debtors more and more (with the recent exception of the 2005 amendments). There have been countless fair-minded legislators and others related to the legislative processed that have helped push the law in that direction, because they cared about people in financial distress like you.

Those Who Can Make this a Viable Option Today

The second group of people who have cared about our financial plight are bankruptcy attorneys. Yes, it is easy to be cynical—to say that they care because they want to make a buck on you. But the truth is that most of these attorneys—most of US—got into this corner of the law because we do like to help people. There are few if any other areas of law where attorneys can make as much of a positive difference in the lives of their clients so quickly. It’s a challenging area to work in—emotionally and financially—so the attorneys that stay in it tend to do so because they do care.

The Help That Is Available

Look through this website for the countless and often tremendous ways that the different Chapters of bankruptcy can help you. You get immediate protection from virtually all of your creditors. You can often save your home and/or your vehicles. You can discharge (legally write off) most debts, and those you can’t can be paid in part or in full while under protection from creditors. Your assets and income are usually completely protected.

Choosing to Accept the Help

All you have to do is ask. Most attorneys do not charge for their initial consultation meeting. Yes, attorneys need to be paid for their work, but usually there are ways to make that happen that allow you to choose the option that is truly the best for you. Attorneys are legally and ethically obligated to lay out legal options and describe the advantages and disadvantages of each. They must respect your decisions, so they will not force you to do anything.

It only makes sense to get the advice you need so that you can make well-informed decisions.

The Better Life Available

Most people who file bankruptcy come out of the process debt-free, unless they have debts they want to maintain—such as a vehicle loan or home mortgage. Most keep everything they own. They are simply benefitting from the law that was created over centuries exactly for their benefit. They regain a sense of control over their financial futures. They can sleep at night. They get a fresh start.

 

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