The bankruptcy laws of the United States give both debtors and creditors an opportunity for relief from economic distress. For debtors, the bankruptcy laws afford an opportunity for a fresh start, unburdened by the economic and often emotional drag of an unpayable debt burden. For creditors, the bankruptcy laws offer an opportunity to see that their claims are treated in an even and fair way along with the claims of other creditors.
Bankruptcy is not a new idea. Abraham Lincoln’s legal practice before he became President included bankruptcy. The concept of the “jubilee”, a period of in which slaves were freed and debts forgiven, has biblical roots.
The ability to discharge debts that cannot in other ways be repaid is a relief to the individual or business that cannot function normally in the economy because of the paralyzing effect of unpayable debt. But there is also a sound public policy that recognizes that an individual or business that cannot function because of its debt burden is best equitably relieved of the burden so that the economic drive and energy freed up can be productively channeled again, whether for family and loved ones or perhaps a new business venture. And yet, despite its historic acceptance and social and public policy that supports the concept, experience has shown there is a great reluctance for the individual not only to take advantage of the bankruptcy laws, but even to find out about what rights (and obligations) they provide.
The question is “why”? There is a large difference in how large business entities, (public utilities, airlines, and even cities, etc.), view bankruptcy and how individuals including small business owners view it.
When large corporations file for bankruptcy in order to jettison or reduce burdensome obligations or contracts, for example, the reception from the business community to a successful reorganization is invariably positive and those making the decision to take advantage of the bankruptcy laws are viewed positively.
For the individual faced with similar financial predicaments, however, the decision to explore the option of bankruptcy is often mixed with personal reluctance based often on a sense of failure, shame, or guilt – all very understandable emotions in this emotionally charged area.
So instead of taking advantage of the laws on the books for everyone, large corporations and smaller businesses or individuals alike – the tendency is to deny, delay and avoid the decision to explore the options available for debt relief. This is a mistake. Over many years of my professional practice involving debtor and creditor rights under the bankruptcy laws of the United States of America and the hundreds of cases that I have handled in this area, I have seen fewer than a handful of situations where individuals have approached me with what I regarded as improper motives.
To the contrary, the most common situation by far is for clients to wait too long to come in for a consultation about how best to deal with their situations. The delays have often cost these individuals hundreds of thousands of dollars in lost assets that could have been saved through exemptions in bankruptcy or that have resulted in unnecessarily increased liabilities such as non-dischargeable taxes, all of which could have been avoided had timely advice, leading to timely action, been sought.
The bankruptcy laws of the United States of America are on the books for everyone, large and small. Claim your legal rights as a citizen and find out what you are legally entitled to before it’s too late.
Next: How delay can be deadly. Timing is everything. Don’t come up short if you’re selling short.
This website is designed for general informational purposes only. The material presented on this website should not be construed as formal legal advice and does not establish an attorney-client relationship. Please contact the Law Office of William Pascoe if you have questions regarding your personal situation.