This personal bankruptcy story was posted on the internet in February of 2010 as a comment in a discussion on bankruptcy: “As a provider for a family consisting of 1 spouse and 5 children, I was let go but at the same time “blessed” because I just couldn’t “do it” anymore in the “high end” residential service industry (landscape design). I suppose that I gave up $1,200 a week (gross) job to preserve what I believe in and what I want my children to retain as the more important factors in life; however, now being 4 months behind in your mortgage and still idealistic, …simultaneously contracting with a bankruptcy attorney, and having (my credit card company) call you hourly, does not help me feel better about the situation. Yet I must remain strong to break free from these chains that I once called comfort and security. Rather they were (and still are) oppression and indignity. Are some of them my fault? Yes. Yet, am I not a product of my larger urban society? Yes again. Perhaps we (me & my creditors) should end this relationship like a “no-fault” divorce – amiably… Best of luck to the rest of ya!”

Without realizing it, the debtor in this personal bankruptcy illustration is suggesting what should be obvious to the rest of society. There is really no good reason we should view filing for bankruptcy protection as anything other than a tool used by our society to potentially help alleviate a bad financial situation between two parties. Believe it or not, that is exactly how most creditors in the form of businesses and banks view the process.

People who have been in business, and especially banks, understand the risks involved in doing business. They particularly understand the risks they take when allowing their customers to buy on credit or to make them loans. As a matter of fact, they encourage credit and for good reason. They understand the credit process so well they spend millions of dollars annually lobbying Congress relentlessly to make credit laws to their liking and favor. In 1980, the federal government passed a special law which allowed national banks to ignore state usury limits and peg the rate of interest at a certain number of points above the federal reserve discount rate. The maximum usury rate allowed by law is 24% APR. That means if you put $50,000 on your credit card and the company has a 24% APR attached to it with a 2% minimum payment, your minimum payment will never reduce your debt. If you pay $1000 a month for the rest of your life, at our current federal maximum rate legally allowed, you will never pay off the $50,000 worth of credit card debt.

Simply put, the banks and credit issuers play the numbers game. They charge the merchants up to 3% per transaction up front. That is 3% per month on the balance, or 36% per year gross. In addition, they charge the user of the credit card interest up to 24% or more per year if they don’t pay on time, plus penalties and fees. The creditors know there is going to be a certain number of debtors who eventually cannot pay making it simply a business where the creditors encourage all they can to go into debt to them. So, why shouldn’t they be able have an amiable divorce from some of their debtors? It is simply part of the grand plan. Yes, they would like for you to pay everything you owe them, and make no mistake, when you agree to take credit, you do owe for what you have taken. My point is simply that credit is a two way street in America. By allowing this system to naturally flow, the theory is that credit makes money easier to obtain helping to create jobs bolstering stagnant economies. Tight money on the other hand, theoretically threatens to further stagnate the economy.

The bottom line is creditors will stay in business as long as it is financially feasible for them to do so. Bankruptcies are calculated in the formula for doing the credit business. If you are truly bankrupt and have come to that place where you can no longer have the current income to pay your living expenses and reduce your debt over a five year period, you may be bankrupt. Filing for bankruptcy is an amiable way of alleviating a bad financial situation between two parties. After all, it is just business.

Bankruptcy laws are complicated, and common sense indicates you will need a bankruptcy lawyer in order to properly understand how these complex laws may apply in your situation. If you determine you are in need of relief from the stress associated with debt and you live in or around the metropolitan area of San Antonio, Texas, contact us today . We will help you find a bankruptcy attorney in your area that will help you with any questions you may have on bankruptcy law.

Similar Posts:

Share