Filing for Bankruptcy Protection is Always Fair

Some creditors may think bankruptcy protection is unfair, especially those who see filers as deadbeats just wanting to beat the system. Nothing could be further from the truth. Filing for bankruptcy protection is always fair.

This personal blog was posted on the internet in May of 2010:

“I think I know those 2 people. They owe me $20K for which I have promissory notes. They have defaulted. One has filed bankruptcy; the other will. Their debts will be discharged and the guy will come into an inheritance of about $200K within the next 2 years. I’m out of luck. I worked hard, paid my bills on time, paid off my credit cards each month, I have a decent income, and I do not live beyond my means. What did they do?  They get to goof off, play tennis, not work… and file bankruptcy to get off the hook. NOT FAIR or ETHICAL. I think the bankruptcy laws need to be a lot more strict. These people are just ducking.”

First of all, creditors are not without culpability when making loans to debtors. They know the risks, and they often build the risks of default into what they expect to get back on their financial investment. As part of their risk planning, most creditors check out the credit of the potential debtor before they sign any promissory notes getting into a business relationship with the borrower. Creditors are aware of the risks.

If the creditor in our illustration didn’t check out the borrower’s credit, does the irresponsible loan made by the creditor mean they are unethical or incompetent?

The creditor in our illustration cries foul when her debtors default, then she wants stricter bankruptcy laws. I suppose she would be happier if our nation returned to debtor’s prison until the debtors paid her back.

As a society, we have come a long way since the days of debtor prisons. The Constitution provided for our protection against those antiquated ways when it gave Congress the power to legislate bankruptcy law making the primary laws governing bankruptcy federal. State laws supplement the federal laws by clarifying the necessary details. The laws have been designed to protect both creditor and debtor making bankruptcy a legal proceeding designed to allow the honest person or business to work their way out of a bad financial situation, or in some cases, to start fresh.

Bankruptcy fraud is a crime and can include concealment of assets, concealment or destruction of documents, conflicts of interest, fraudulent claims, false statements or declarations, and fee fixing or redistribution arrangements. Falsifications on bankruptcy forms often constitutes perjury. The new bankruptcy laws, which are more generous to honest debtors, were never intended to allow bankruptcy fraud.

Our bankruptcy system and laws work. It is disingenuous for the creditor in a public forum to make the blatant assumptions and accusations she did against her debtors. Her accusations of the debtors “just ducking” their financial obligations might carry more credence had she backed the accusations with criminal and factual deeds of her debtors.

Nevertheless, she can make her suspicions known in the 341 meeting to the U.S. Bankruptcy Court handling the bankruptcy. If history is any indicator, U.S. Bankruptcy Courts do not take fraud lightly.

Filing for bankruptcy protection is always fair. After all, it is the law. The creditor should have known what kind of financial agreement whe was making. She had a promissory note, which indicates she did. She might want to educate herself on bankruptcy law and just how fair the system really is before she publicly comments.

Bankruptcy laws can be complicated. If you are considering filing for bankruptcy, contact a bankruptcy lawyer. If you need of relief from the stress of debt and you live in or around the metropolitan areas of Milwaukee or Waukesha, Wisconsin, contact us at www.betterbankruptcy.com .We will help you find a bankruptcy attorney in your area who will answer your bankruptcy questions.

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