Bankruptcy and Gumption
Most people come to talk to me about bankruptcy have been putting it off for years. People want to protect their “good credit” when all they are really doing is piling up bad credit. People worry that filing bankruptcy is “not how they were brought up.” They think they are better than Donald Trump, who used the bankruptcy law to get richer.
Some men, especially, are too embarrassed to ask for help.
For all those reasons, when people come to talk to me about bankruptcy, a lot of them a just exhausted. They want to pay their lawyer bill, sign their papers and be done.
For a lot of people, it’s not that easy.
Dave Carmen came to see me June 14. He had moved to this area to take a substantial Federal job promotion. He started to work at the new job, January 3. His wife joined him and started working here in March.
He had hoped with the new job they would be able to handle their debt load; but like many people they had not allowed for the high cost of living in Northern Virginia.
I made notes on what Dave told me and we went over his budget, together. “There’s a lot of income here, but I’ll try to get you qualified on the long form.” I needed to do more computer work, told Dave to come back Monday June 19.
I told Dave on June 19 there was good news and bad news. The good news, was really good. We could go ahead with Chapter 7 bankruptcy in June, and eliminate more than $50,000 in card cards and finance company loans. The bad news? He would lose eligibility in July!
(Why would Dave lose income eligibility in July? Chapter 7 bankruptcy income eligibility is based on the past six months, ending a month before the papers go into the court. We needed December, when he was on his old job and his wife wasn’t working, to get our six month average down low enough. In July, December would drop out of the average and the income would just be too high. Remember he had gotten a big raise starting January.)
We had twelve days to get his Chapter 7 bankruptcy done. Immediate next step Dave needed to identify an additional $600 a month in expenses—I told him where I thought his budget was too low, based on what I know about him and his family. I needed it by tuesday, June 27 at the latest. I had no doubt he could do it.
Tuesday June 27 came around and I hadn’t heard from Dave. Now we are into July, and it’s too late. Dave will have to pay back $54,000 that he can’t afford. Pay back $54,000 that we could have eliminated two weeks ago.
Dave had run out of gumption. The years of battling with the creditors, the stress of moving his family and the new job, he was worn out. He needed a couple more hours of hard work to take an enormous burden off himself and his family; and he just didn’t have it in him.
The Purpose of the 2005 BAPCPA Bankruptcy Law
The 2005 BAPCPA Bankruptcy law was supported in Congress by people who claimed there was widespread fraud and abuse in the bankruptcy system. Studies in the ten years after didn’t show any of that. The statistical impact of BAPCPA is seen in the “substantial increased access costs.” Filing bankruptcy is harder and more expensive. That was probably the real purpose of the bank lobbyists who drafted the law.
The 2005 bankruptcy law is filled with “gumption traps.” Rinky dink requirements that are designed to get you to give up.
Gumption. In America, if life knocks you down, we get back up.
President Trump says knowing how to use the bankruptcy laws is a “tremendous thing.” (Love him or hate him, most people would agree President Trump has plenty of gumption.)
If you are in financial trouble, please come to see me—or another experienced bankruptcy lawyer—before all your gumption is gone. When you consider bankruptcy, your opening to a better life—a new start and a clear field—is right in front of you. You just need a little more effort to take control of your life, again.