The Purpose of Bankruptcy is to Help You!

The purpose of  bankruptcy is to provide a fresh start to honest debtors. As long as you did not lie on your credit applications or hide valuable property, the bankruptcy court will help you get a fresh start in life.

"A new opportunity in life and a clear field for future effort"--That's what the Supreme Court says. 

The new law, which took affect in October 2005, made the paper work a whole lot harder, but with careful planning, people who really can't afford to keep paying their debts can usually establish eligibility.  For most people, bankruptcy still works.

If you are planning to file bankruptcy, many people will give you the wrong idea about bankruptcy. Those people think that bankruptcy is some kind of punishment because you cannot pay your bills. That's completely wrong!

You probably heard that new bankruptcy law that took effect October 2005 was supposed to force people out of Chapter 7 get-out-of-debt bankruptcy and into Chapter 13 debt consolidation plans. That law was written by bank lobbyists who said the good times would go on forever, and there was no reason why  everybody shouldn't be able to pay their bills on time.

Now, we know better.

The financial crisis that crashed the stock market and closed big banks has pulled down millions of other people.  People like you.   But, there is help.

The bankruptcy law, first passed in 1898, is still there.  The 2005 changes made the paperwork harder and the regulations trickier, but most people can still get the debt relief they need.   Bankruptcy still works.

Under the new law, everybody is assigned a budget--for food, clothes, transportation--and based on that the court decides if you should have money left over to pay your debts.   Some of the numbers in that assigned budget, are pretty fair, some are ridiculous.

Here's the most ridiculous.  People in Northern Virginia are allowed $230 per month to cover car expenses--gasoline, insurance, car repairs, maintenance, tires, everything. 

For people with long commutes (and Prince William County has the longest average commute of anywhere in the country, outside of New York City), $230 just might cover gasoline and car insurance--leaving nothing at all for tires, maintenance, repairs.  

Even so, we can usually get your budget to work. 

On some things, the assigned budget is easy on some  people.  (The bank lobbyists who wrote the new law for Congress weren't exactly rocket-scientists;  they didn't not much about bankruptcy law, and they didn't know--or care--about what hard working people do to survive.)

So some breaks are built into the law; and if good planning, we can usually set you up to take advantages of the breaks,  and offset the areas where the law is unfair.

This means we will do everything legally allowed to do to arrange your situation and present it to the court, so that you can get approved for a Chapter 7 wipe out your debts bankruptcy.  (Assuming, which is true for most people, that Chapter 7 is best for you.)

If you really can't pay your bills, we can usually show--even under the new law--that you really can't pay your bills.

And if you end up in Chapter 13, we'll fight to hold down your repayment to the legal minimum, so that at least you end up with a lot more breathing room than you have now.

The 2005 Bankruptcy Law  doubled the size of the bankruptcy code; it did a lot more than than just assign you a budget.   

Your  paperwork is a lot harder.    Under the old law there was a presumption--a legal assumption--that you were eligible to file a Chapter 7 get-out-of-debt bankruptcy.  Now you have to prove it.

There are new rinky-dink requirements--hoops you have to jump through:  taking two classes on the internet, saving your pay stubs for six months, showing the court your social security card, tax forms and bank statements. 

The people behind the new law sold Congress on the idea that all these requirements and paperwork would make the system more honest.  The result--which is what the lobbyists really  wanted--is that people who are distracted and worried sick--like you, right now--have all this additional burden to face.  They want you to break down, give up, make mistakes that they can use to beat you with.

The bank lobbyists wrote the new with a goal of making it so complicated that you are bound to fail.  My job is to work with you so closely that you have to succeed.    

 Another thing. The  enforcement now is very different.  Investigators from the Justice Department now check behind you, running a computer search, looking at your bank statements, trying to catch you.    

To get through all this, you need documents, details and discipline. They can be in short supply when you are panicked about money.  We'll do our best to help you with clear explanations of what you need to do and how we are working together.

One last thing, the new law is especially tough on people with big families;  the government is likely to claim that people with three or four children are spending too much on food and clothes and rent, when all they are trying to do is take care of the kids. This is one of the things that makes me the maddest about the new law.