Email this page to a friend:: Facts About Personal Bankruptcies
There are lots of misconceptions, myths, and misunderstandings about bankruptcy. Often, people feel embarrassed and ashamed about filing a bankruptcy. However, when you understand the facts about bankruptcy, it becomes clear that bankruptcy is an important part of our financial system and even the most responsible people can find themselves in need of relief from debt.
Bankruptcy is not a new phenomenon. This view that it is necessary to cancel out debts from time to time shows up in many places throughout history. In fact, bankruptcy has been around for thousands of years - many experts trace the beginnings of bankruptcy back to the Bible. Deuteronomy 15:1 states: “At the end of every seven years you shall have a relaxation of debts, which shall be observed as follows. Every creditor shall relax his claim on what he has loaned his neighbor; he must not press his neighbor, his kinsman, because a relaxation in honor of the LORD has been proclaimed.” (New American Bible). Ancient Rome is where we get the term “bankruptcy” – the word comes from bancus, the merchant's counter, and ruptus, broken. It refers to the situation where a merchant could no longer operate his business, and so his merchant’s bench was broken and taken away. They even appointed trustees to administer the cases back then. Our modern bankruptcy law has its roots in a law passed in England in 1570, and the first American bankruptcy law passed in 1800.
Many people throughout history have faced bankruptcy. You may be surprised when you look at a list of people that have filed either personal or business bankruptcies. The list includes Presidents (Jefferson, Lincoln, Grant, and McKinley), captains of industry (Disney, Ford, Hershey, Trump, Heinz, and Goodyear to name a few), and other well-known people from all kinds of backgrounds (like Mozart, Mark Twain, Oscar Wilde, P.T. Barnum, Francis Ford Coppola, and John Wayne).
You aren’t alone if you are considering filing a bankruptcy today. Bankruptcy filings are very common, and on the rise. In 2006, there were 617,660 filings, 850,912 in 2007, and over 1 million (1,117,771) in 2008. With the current credit crisis, mortgage foreclosures at all-time highs, and unemployment on the rise, bankruptcy is often the only way to get back on your feet.
As a bankruptcy attorney, I meet new clients every day, and I hear their stories about what brought them into my office. Many people seem to think that it is only irresponsible people who file bankruptcy. However, in my experience the people that are filing bankruptcy are mostly people who have been laid off from work, are drowning in medical debt from an illness or injury, have been hit by payment increases on their homes due to adjustable rates and tax increases, or missed a couple of payments, only to be slammed with fees and charges they can’t afford.
People sometimes misunderstand how a bankruptcy works and its effect on people who file. You don’t lose all of your property – there are exemptions for most kinds of property that more than cover what most people own. It doesn’t destroy your credit; most clients actually increase their credit score in as little as six months after the bankruptcy, and most people are inundated with offers of credit upon their discharge. You won’t lose your job if they find out about a bankruptcy – federal law prohibits employers from discriminating against people who have filed.
If you have any questions about whether a bankruptcy might be right for you, contact us about setting up a free consultation.
