October 15, 2020 / Jeffrey Kelly
A few weeks ago, I was at a large hardware store and watched a young father and his 3 year old son walk into the store. I was in the lightbulb section and they walked up next to me. The father let go of the son’s hand and the son slowly began to walk away. I am 50 years old and I’ve helped raise 5 kids. I think I have developed some kind of sixth sense where I can detect when a drama episode from a child is about to ensue.
The 3 year old child slowly walked away from the father towards a group of Halloween decorative witches for sale. One of the witches had a lifelike size and a button beside it that said “press here.” I bet you can guess what happens next. After the curious little boy pressed the button, the witch came to life and let out some terrifying warnings along with some Halloween sound effects. As you can guess, the little boy belted out some shrill screams and he was shaking with tears.
His good father rushed to his side and comforted him. “Everything is going to be OK” said the good father. “The witch is not real. She cannot hurt you. You are safe in my arms.”
In much the same way, many people are as terrified of bankruptcy as that sweet little boy was of the fake witch. In my 22 years as consumer bankruptcy attorney, I have seen some people do some crazy things to try to avoid bankruptcy.
Personally, I think the worst thing a person can do is drain the 401k retirement account to make payments on credit card debt until the funds run out. Your 401k is a protected asset and you get to keep all of it when you file Chapter 7 in 99.99 percent of the cases. It is frustrating to see people fruitlessly lose their retirement funds in an effort to avoid a clearly inevitable bankruptcy.
Another common bad move to avoid bankruptcy is to pawn the title of a car. When you miss your payments of a title pawn loan, the title of your vehicle transfers automatically under Georgia law. As a consequence, Chapter 13 will not save you from the clutches of a title pawn creditor.
My friend, Richard James, has a saying that goes like this: Fear = False Evidence Appearing Real. In this blog post, I would like to address why some of the most common fears about bankruptcy are not real.
The most common fear is that lawyers are scary and not easy to speak with. This is certainly not true about myself or the bankruptcy attorneys at my law firm. Check out our reviews on Google and you will see that this is true. We some video testimonials as well on our youtube channel. We understand and we are your side.
Another common fear is that you will never be able to get credit again after you file bankruptcy. Yes, Chapter 7 bankruptcy will stay on your credit for 10 years and Chapter 13 will stay on your credit for 7 years. The truth is that most people have no problem obtaining credit once their bankruptcy case is completed. Just ask your friends. Almost everyone has some connection to a friend or family member who has recovered from filing bankruptcy.
If you were a lender, would you be willing to loan money to someone who has a huge cloud of debt hanging over them and is going nowhere? Of course not. How about someone who just completed their Chapter 7 bankruptcy an owes no one? If they have good income, how likely are they to obtain credit? Ask a car finance company because they make loans to people who have just obtained their Chapter 7 discharge all the time.
Another irrational fear about bankruptcy is that some people believe that the trustee is going to come to their house. I have filed thousands of bankruptcy cases and I have never heard of the trustee going to a person’s house to look at their stuff. There are always exceptions to the rule but I’m sure it is a rare case. When Evander Holifield filed for bankruptcy, he had millions of dollars worth of stuff. In his specific case, the trustee had a duty to inventory his household items. In contrast, most people don’t possess anything of significant cash value.
Personally, I think that if you have financial problems, the thing you should fear the most is procrastination. If you put your head in the sand and ignore the problem, your creditors will obtain judgments against you. They will then use these judgments to completely clean out your checking account and take 25 percent of your paycheck in Georgia. In addition, if you have a house, they will put a lien on it.
There is no need to be afraid of a court hearing. Bankruptcy Court hearings are currently virtual which reduces a lot of stress. This is the only good thing I can think of that has come from COVID-19. This may change once we find a cure for COVID-19 or the infection rate drops dramatically but until then, I think it is going to be this way for the foreseeable future.
The bottom line is this……if you have financial issues, you should take advantage of a free consultation and talk to a bankruptcy attorney as soon as you can. Call us today at 770-881-8449.