Interviewer: On an emotional level, are your bankruptcy clients different from your divorce ones?
Tanya: Yes, they do have different emotional responses to the process.
People Consider Retaining an Attorney for a Bankruptcy Filing When Their Debt Level Is Unmanageable
Interviewer: Why do people get to the point where they decide to hire a lawyer to file bankruptcy? What is weighing on their mind that you have observed?
Tanya: Clients come to me because the debt is just no longer manageable. The money they have coming in just doesn’t cover the money that is owed.
Maybe somebody’s suing them, or they just got a notice of foreclosure on the house. They haven’t paid the mortgage in many months, along with any number of other bills and they are under a lot of stress.
Bankruptcy Was Created by the Federal Government to Afford People a Fresh Financial Start
People in the outside world look at bankruptcy as something to be ashamed of or they absolutely don’t want to do it and I completely understand that. On the other hand, it’s a federal law and it is designed to give people what is called a fresh start.
There Should Not Be Any Social Stigma or Feelings of Deep Embarrassment Attached to a Bankruptcy Filing
Almost all of my clients are unhappy about having to file for bankruptcy. They’re embarrassed. They really don’t want to do it.
They want to figure out a way how they can manage their debt without filing for bankruptcy, but most people that do file are not doing so in bad faith. Something happened, possibly they got divorced, somebody got sick, somebody lost a job, or some other crisis.
Bankruptcy Should Be Seen as A Way That Addresses, Not Avoids, Financial Obligations
People don’t want to file for bankruptcy. People don’t want to lose their home. That’s not a rational thing. People come in, really stressed out and troubled by their bills and their collections and have this giant burden hanging over their head taken away. I get great satisfaction in being able to help resolve their debt problems.
Bankruptcy Offers Relief from a Seemingly Unresolvable Problem
When I handle a bankruptcy for them, this essentially resolves these problems 99% of the time. The problems are gone and they a get a fresh start. They’re so appreciative. They really experience relief.
Psychologically, physically, financially they get relief and I get so many thank-you notes after a filing for bankruptcy. My clients could never have pictured what their life looks like after the bankruptcy when they came in.
They no longer have people calling them. They don’t have to worry about what is going to come in the mail. They can breathe. They can go to work. They don’t have to experience the pressure of having $12 to buy food and $300 owed to their credit card. They can go back to a level of normalcy.
When Will People Expect to Have Relief from Collection Activity?
Interviewer: I assume after people file do they experience this. Is it only at the end or is it right away that they experience some relief?
Once You Have a Case Number for Your Bankruptcy Filing, a Bankruptcy Stay Is in Effect
Tanya: They will experience relief right away. This is because once you file, once I get all the data and I’m paid, we prepare the paperwork right away. Once it is filed in the court and we get a case number, the debtor is entitled to what is called the bankruptcy stay which means that none of the creditors or collections that are ongoing can continue.
In a Bankruptcy Stay, Your Creditors Cease All Collection Activity
Right from the beginning the debtor is entitled to relief and he is advised of that right at the beginning. Right away the calls stop, the letters stop by and large and they can’t be harassed anymore and they know nothing is going to happen to them going forward with regard to the past debts.
Interviewer: I’m sure there are many barriers to even getting people into the office to see you. Do you perceive that people just wait “too long” to file?
You Need to Have a Minimum Amount of Assets to File Bankruptcy
Tanya: Every case is unique. I’ve had people that come in that don’t have so much debt and it’s not really worth it for them to file for bankruptcy. Some people think that they have huge debt but don’t count the large assets that they have.
You have to have a minimum amount of assets too. I would say it’s a funny thing that almost statistically, most people file for bankruptcy when their outstanding credit card debt or unsecured debt comes up to about the level of their annual income. That’s been something I’ve seen over the years.
You Must File for Bankruptcy before Your Debt Level Exceeds Your Income Level
I don’t know whether it’s ever been calculated or measured in terms of statistics, but if you owe $30,000 and your credit card debt is $27,000 or you owe $60,000 and you earn about $65,000, that’s where I think it becomes completely unmanageable.
Interviewer: That’s a tipping point for people to say all right I better file.
Tanya: Yes. When it gets to point where no matter you do, no matter how much you pay to the creditor, it’s never going to go away because you’re still accruing interest. And you can’t pay your regular bills.
It’s a bad situation, but I would say some people wait too long but most people realize they have to act when they just can’t pay it anymore. It takes years usually to accumulate the problem. It’s not as if it happened over night.