Lawyers are trained to argue two sides of any position. So an argument can be made that bankruptcy is both to be feared and not to be.
Potential clients visit bankruptcy law firms with a wide array of opinions about bankruptcy. Some pronounce: “I need to file a chapter 13 bankruptcy,” or “I need to file a bankruptcy to get rid of my mortgage.” Others come prepared with some research or with none, having received a court summons. The more nuanced (and correct) answer is that because bankruptcy can often be counterintuitive the consequences that go with it, good and bad, must be considered by a competent bankruptcy lawyer.
Written into the U.S. Constitution and provided for by Congress, bankruptcy can be an opportunity for a fresh start. It can re-balance the power between a debtor (someone who owes something to someone else) and a creditor (someone who is owed something from a someone else). It should not, however, be taken lightly, and it is not a free ride. Congress has also ensured serious ramifications for filing in bad faith and ultimately ensured that a bankruptcy filing results in some cost to the filer (financially, time-wise and even emotionally).
Two common pitfalls are (1) a debtor (or creditor, for that matter) attempting to use the Bankruptcy Code in a dishonest way or for disingenuous reasons; and (2) a debtor attempting to file alone (pro se) or with the help of a non-attorney petition preparer. These are areas where bankruptcy should certainly be feared.
On the other hand, when a debtor retains a competent and experienced bankruptcy attorney for counsel, bankruptcy should not be feared and in fact often brings great relief. Such bankruptcy attorney will only file a petition if necessary and warranted and where it provides a genuine benefit to the client. Bankruptcy, at it’s best, strengthens the client-debtor’s financial position. Like all good attorneys, we file bankruptcy cases that will improve a client’s financial position and may well advise against filing for bankruptcy or at least to explore other other options, first.
With representation by an experienced bankruptcy lawyer, bankruptcy should not be feared.