Bankruptcy

Are you too embarrassed to file bankruptcy?

By David Leibowitz, Illinois and Wisconsin Bankruptcy

Our good clients often tell us that they are embarrassed by the thought of filing for bankruptcy. I tell them that they don’t have to be.

First of all, people fear that their names are going to be published in the newspaper. Now that might happen in small towns. But nothing’s secret in a small town anyway. In larger communities, you won’t see a publication.

Then, they fear that bankruptcy will create a stigma. Well, there’s no reason for that. Bankruptcy affects all social and economic strata. It happens to people of all races, nationalities and ages. You won’t be walking around with a scarlet B emblazoned on your forehead.

Today, a client came to see me. She’s a school-teacher. She purchased her dream house. Unknown to her, it was built on bad soil. The builder knew. The builder built it anyway – on a sink-hole. The foundation is collapsing. The house has lost 2/3 of its value. She’s stuck on the mortgage too. The court ordered the builder to fix it. Do you know what happened? The builder filed bankruptcy – a chapter 11 in Wilmington, Delaware. The builder’s banks seized all its accounts and assets. The banks may turn out all right. But our poor school-teacher homeowner will be out close to a quarter million dollars.

Do you think that the builder is embarrassed?  Heck no!! For them, bankruptcy is a financial strategy to follow to protect itself from banks about to foreclose on them.

Creditors have rights. Debtors have remedies. Bankruptcy is a very strong remedy for you, the consumer, if the banks or other creditors are kicking you around. Fear not. And send your embarrassment to the winds.

Full post as published by Bankruptcy Law Network on March 10, 2010 (boomark / email).