The mere idea of filing a bankruptcy in either Chapter 7, Chapter 13, Chapter 11 or Chapter 12 scares people blue. Most don't worry about Chapter 9 or 12 because they don't qualify.
But the first thing that most people say when they meet for the first time with a bankruptcy lawyer initially is, "I really don't want to do this."
I always point out that the same people who file a bankruptcy for fun are the ones who line up at their dentists for a recreational root-canal.
NOBODY wants to file a bankruptcy. Virtually everybody sees bankruptcy as a failure, and in many ways it is at least an admission of failure. And you need to admit that what you're doing isn't working before you can move on to succeed.
When I started my practice after working a couple of years for Chief Bankruptcy Judge Caldwell and Bankruptcy Judge Maggiore, lawyer advertising had just become legitimate because of the Supreme Court decision in the Bates vs. State Bar of Arizona case.
So I walked out and took out a half-page ad in the Yellow Pages, and I was the first bankruptcy lawyer in Arizona to have such an ad.
I coined the slogan, "Not a failure, but a fresh start!" back in 1982 or thereabouts.
And lots of people dropped in to talk about it.
A lot has changed since then, but one thing has not.
Decent folks don't ever WANT to file a bankruptcy, any more than a kid with pneumonia wants a shot of penicillin.
But in the same way that when a kid with pneumonia needs penicillin, there are times when a decent person has to say, "Yup, I have a broken bench, and I need penicillin. I mean a bankruptcy."
Nobody EVER wakes up in the morning and says, "I want to be a bankrupt today!"
For one thing, the technically correct term since the New Code of October 1, 1979, is "debtor", not bankrupt. The legislative history to the New Code (now the really old and frequently patched Code) explains that Congress changed the word from "bankrupt" to "debtor" to reduce the stigma that came with filing.
Congress should have chosen almost any other word at all but debtor. Wingnut, rutabaga, or Sasquatch would have been better choices. The word debtor shows up all though the law of secured transactions and banking law, where it can mean very different things than bankrupt, which had the advantage of precision: you knew exactly what it meant.
Which is surprising, because the word "bankruptcy" itself comes from the phrase "broken bench", because when a lender or money changer in Venice in the Middle Ages (who sat in the public square at "bancas", or benches) couldn't meet his financial obligations, his creditors broke his "banca". Broken bench. Banca Rupta. Bankrupt.
I always liked that story.
But I would like it better if potential debtors were less frightened. It tends to make them wait too long to get help, so they may obtain a sub-optimal result. The classic case is an individual with overwhelming credit card debt who gets a huge debt consolidation loan, which is structured so that it becomes a mortgage on their otherwise-exempt homestead equity.
And then if they can't pay the mortgage, they lose their house. Bad decision, in retrospect.
Or the poor devil who scrapes up every nickel he can find to settle a million dollar business debt for $100,000. And doesn't get with his cpa, so he doesn't know that he just generated a non-dischargeable tax debt of a few hundred thousand dollars. That is, he traded a dischargeable debt for a non-dischargeable debt. At a massive interest and penalty rate.
Oh, well. I've heard it said that good decisions are based on experience. Which is based on....bad decisions!
Nothing in the foregoing is intended to be, or may be used as, legal advice. If you're drowning in debt, for heaven's sake go find a Martindale Hubbell AV rated Board Certified Bankruptcy Lawyer. Or Attorney. Or Specialist. At least he or she will have seen your problem before, and may even have a guess how to fix it. Like maybe with penicillin.
well written, informative, and most of all entertaining! Keep up the great work!