Understanding Bankruptcy, 4/6/18

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Question: The people who file for bankruptcy: What kind of people get rid of their debts?

My office focuses on consumer bankruptcy. As an attorney, I am asked often about my clients and how folks can just walk away from debts. I am asked how I can sleep at night, knowing I have assisted folks with getting rid of creditors.

My answer is: “I sleep quite well, thank you!” and “the kinds of people you work for, work with, church with, marry, all kinds of people file bankruptcy.”

There are many articles about celebrities who have filed for bankruptcy and many articles about famous folks who have filed for bankruptcy protection. But for every celebrity, there are many other folks who live quiet lives of desperation, who worry about what will happen when the bankruptcy petition is filed, whether they should file a Chapter 13 or a Chapter 7, or the bigger question: How they will pay for the process. Who are they?

Recently, I met with a couple who cleared six figures – but their child had been life-flighted to a major urban area twice for specialized care at a children’s hospital. Their insurance wouldn’t cover an $80,000 life-flight bill. And they had no hope of paying for it, as one parent had to now stay home to care for the child, and there would be continued weekly trips back to the urban center for treatment.

Also recently, I met with an 80-year-old woman whose Social Security was being administratively garnished by a government agency and who was left with approximately $890 to pay her rent, food, utilities and medications not covered by Medicare. Not surprisingly, she lost her apartment. Did the garnishing government agency care? Nope.

I see folks from all walks of life – the line worker to the president of the company to the manager. None of them is happy to see me or wants to be in my office.

Next Week’s Question: Is a Chapter 13 plan years of suspended animation?

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