One of the most common concerns or misconceptions that clients express in one form or another is an insecurity that if they file bankruptcy that makes them somehow unethical or dishonest. While there may be a small minority of people who intentionally abuse the bankruptcy system, it is my overwhelming experience that people filing bankruptcy are honest, hard-working and upstanding people. The fact is that every society has some system to deal with honest and hard-working people who are experiencing extreme financial hardship.
In ancient Greece and other civilizations, when a debtor could not repay his debts, he and his family were forced into debt slavery until the creditor was repaid. Read more at Wikipedia. In the Old Testament debts were automatically forgiven every 7 years and every 49 years. Id.
The founding fathers of our great country (and all of us as a society) mutually agreed that the system to give good people they help they need through tough financial times to ethically and honestly deal the best way they can with their debts…is our federal bankruptcy relief system. Do you believe the Constitution is dishonest or unethical? If not, then you can not believe that bankruptcy is dishonest or unethical because bankruptcy as a system to protect debtors is embodied in Article 1, Section 8 of the United States Constitution. The fact that bankruptcy is the method chosen by the United States Constitution shows its importance and legitimacy. Bankruptcy protection is an express or implied provision of every contract we enter into in the United States that protects good people from creditors who frequently are over-aggressive and abusive.
Many Honorable, Honest, and Hard-working People have Filed for Bankruptcy
While bankruptcy is a matter of public record. The fact is that most people won’t know you filed for bankruptcy unless you tell them. Because it is not widely publicized, you may be surprised to learn that president Abraham Lincoln (aka Honest Abe), Thomas Jefferson, and even Henry Ford have all filed bankruptcy? Read more here. Many of our financial institutions
Bankruptcy Is NOT a Free Pass
Contrary to common belief and what creditors frequently intimate, bankruptcy is not a free pass. In every Salt Lake chapter 7 or Salt Lake chapter 13 the debtor is required to give something in exchange for a discharge of his or her debts. In chapter 7 cases, the debtor exchanges non-exempt property for a discharge. While it’s true that chapter 7 debtors frequently don’t have any non-exempt property, they nonetheless must be prepared to surrender such property. In chapter 13 cases, the debtor makes a monthly payment to repay debts over a limited period based on the debtor’s ability to pay. In either case, the debtor is not given a free pass.
Russell B. Weekes is an experienced bankruptcy attorney in Utah. This article only provides a broad generalization and is not intended to provide legal advice for any specific circumstance. To schedule a free bankruptcy evaluation in Salt Lake, call 801-285-6070 or complete our web form today!