Bankruptcy Discussion

Posts Tagged ‘it’s purely business.”’

I am a bankruptcy attorney with offices in Nassau County and Suffolk County, on Long Island, in New York. I have been practicing for over fifteen years in the same courts, and I would love to dispel some myths about bankruptcy and enlighten people on the legitimacy of deciding to file a bankruptcy petition.

The architects of this country were much more tuned in to finances than you may think. In fact, the basis for the freedom they envisioned had as much to do with money as it did with enumerating basic individual rights. So what does a room full of powdered wigs have to do with your bills? Everything. Article I, Section 8 of the United States Constitution authorizes Congress to enact uniform Laws on the subject of Bankruptcies for the benefit of debtors who are United States citizens. Under this grant of authority, Congress enacted the Bankruptcy Code. It is a set of statutes identified as Title 11 of the United States Code, and it was conceived, drafted and passed into law for . . . YOU!

Unfortunately, you may find yourself in one of the follow situations:

* You or the breadwinner in your family just fell victim to an accident or serious illness and the medical bills and paperwork have crushed your credit, your ambition and any chance you may have had to live like you used to.

* You or your spouse lost a lucrative job or position, and you didn’t realize until now how fragile the balance was between monthly expenses and your ability to pay them.

* Over the past few years, you genuinely believed that your income would improve, so you kept maintaining your needs by expanding your credit card balances. After all, it was only a matter of time before things turned around. However, you’re now maxed out and you have tapped your extended family for “loans” as much as you and/or they are willing.

* You took student loans out to get that degree or license, because that degree or license was your ticket to a higher income. However, the job in your fantasy never came to fruition and now you’re not only in student loan debt but credit card debt as well.

* You bought your house and were on the road to owning the biggest asset of your life. Then you refinanced and decided to take some extra money out of the equity for an addition, or a car, or to pay your kids tuition or to take a vacation, etc. Well, now your house is worth close to or less than your mortgage balance, and your taxes and your groceries and your utilities are 4 times as high. Should your start draining your retirement account?

In the past, the common attitude toward these situations was 1) you were irresponsible, 2) you made your bed, now lie in it, 3) get yourself a couple of jobs, you’ll eventually work it off. I say, with total sincerity and authority, to reset the game for yourself, and have no regrets about it. Just read the following, and you’ll begin to see why.

For the past thirty years, our Federal Government, with our States Attorneys General sitting on their hands, has let banks run wild and they’ve managed to get themselves into a pretty deep hole. Savings banks have been combined with investment institutions. Corporations have started their own banks and have issued their own credit cards. High finance allows bets on just about anything at such levered levels as to put the very existence of these institutions at risk. The Federal Reserve has offered very cheap money to banks, has set artificially low interests rates, and has prevented natural market forces from prevailing. The list goes on, and it may be hard to understand how this relates to you, but here is the prime example of how you may be affected by this game.

The Federal Reserve made money cheap for banks to borrow, and banks lent out much more than they held, as much as ten times more. Many of these loans were recklessly approved over the past decade. However, quasi-governmental agencies offered insurance for these loans as long as the banks made these loans in accordance with certain guidelines. Neither the banks nor the government actually investigated whether these loans were made within the guidelines, but that’s okay because the loans were be bundled together and sold around the world as highly-rated securities. Since it was so easy to get loans, for example for the purchase of a house, the prices of houses skyrocketed. In 1997, the fair market value of a house may have been $165,000, and your loan may have been $125,000. Ten years later, in 2007, the fair market value of the same house was $465,000 and your loan to purchase it was $450,000. Four years after that, the fair market value of the house is $320,000, and the balance on the loan is $440,000, plus the loan is now in foreclosure and real estate price are continuing to decrease in a stagnant market. That’s because the government and the banks manipulated the market. There are two parties left holding the bag – you, the homeowner, and the pension fund or other investor that bought that bundle of securitized mortgages. Next time you hear, “Banks got bailed out. We got sold out.,” you’ll understand it with a little more depth.

With all the sensationally ill-conceived policies and acts of governments, banks and corporations going on these days, and with many of these policies and acts negatively affecting the “common citizens”, you are well within your rights, both morally and legally, to reset the game with respect to your creditors and get a fresh start on life. You can end the telephone harassment. You can end the letters from collection agencies, and tomorrow can really be the first day of the rest of your life. Bankruptcy not only is the beginning of the credit healing process, it is the beginning of the psychological healing. It will help alleviate your stress. This is your health and well-being about which we are speaking. This is important stuff. After all, are you a consumer first, or are you first a human being, family member, friend and soul? Just think about the word, “consumer”! It’s demeaning, and you may never have even noticed.

Therefore, the next time you think about the possibility of bankruptcy for yourself, DO NOT CONSIDER what your neighbor may think about it. He or she has no business judging you, and most likely cannot even begin to contemplate the psychological pain you are now suffering. In fact, your neighbor will probably not even find out if you file a bankruptcy case unless he or she searches the federal docket. The decision to make legitimate use of the bankruptcy laws is a decision that should be made between you and your attorney, end of story.