Understanding Bankruptcy

Bankruptcy:  Bankruptcy helps people unable to pay off debts.  There is a technical side to the law.  There is also an emotional side that touches one’s basic beliefs in right and wrong.  To understand bankruptcy, one needs to go to the beginning.  


Beginning:  In 1848, the nation was consumed with the problem of slavery.  The Mason-Dixon Line was created; the Civil War postponed. Senators came to the President and asked him to free the “white slaves”.


White Slaves:  The “White Slaves” were white farmers (and free blacks) along the river valleys.  They borrowed money each Spring, bought seed, planted corn, and sold the corn (or corn whiskey).  Then the loan was repaid. When too much rain, or too little rain, or something else destroyed the land, the farmer was unable to repay debts.  In effect, the farmers began to wear a “badge of slavery”. The Senators wanted the farmers released from those debts.


How?  How was it to be done?  “Debtors’ prisons” made things worse.


Moses:  The Senate turned to Moses.  The same Moses who came down the mountain with 10 Commandments.  The Jews had thought about God’s 10 rules for a good life and asked Moses for more rules.  One of the new rules was the 15th Chapter of Deuteronomy (KJV), which commanded, in part:


“1: At the end of every seven years thou shalt make a release.  2:  And this is the manner of the release:  Every creditor that lendeth ought unto his neighbor shall release it; he shall not exact it of his neighbor, or of his brother; because it is called the LORD’s release.  3.  Of a foreigner though mayest exact it again: but that which is thing with thy brother thine hand shall release; 4:  Save when there shall be no poor among you; for the LORD shall greatly bless thee in the land which the LORD thy God giveth thee for an inheritance to possess it:  5:  Only if though carefully hearken unto the voice of the LORD thy God, to observe to do all these commandments which I command thee this day.”


In effect today:  In 1848, no congressman would claim to have a better connection to God than Moses. The original Bankruptcy law was the first anti-slavery statute.  From time to time, the bankruptcy laws are redone, but they are still in effect today. Its purpose is to prevent debtors from wearing the “badge of slavery” because of credit card bills, hospital bills, illnesses, or unemployment. 


Warning:  Modern congressmen believe they have better ideas than Moses.  The Bankruptcy laws are longer and more complicated. Get a good bankruptcy lawyer.


Homework:  If one is unable to repay debts, do some homework and ponder the following:  
1) How long has the problem of too much debt has been around.  [Since Moses, 3000 years ago?]
2) What is the purpose of the commandment to release the debt?  [All of us will be greatly blessed when there are no poor among us?]
3.) Are you poor? [Unable to repay debts?]

Bankruptcy or Debt Solution Company plan

Debt solution companies - The GAO issued a report last year saying that only 1 in 10 customers of a debt solution company finished the program. The GAO also found that the debt solution companies tended to collect its fees first, then attempt to settle with the creditor. The customer may pay the debt solution company for months or a year with a 1 in 10 success rate.

Telephone collection calls - and other forms of debt collection continue while the customer is in the plan, until the bills are fully paid.

Bankruptcy - The automatic stay provision of the Bankruptcy act stops telephone collection calls and all attempts to collect a debt. This blog does not attempt to predict the outcome of any case, but "automatic" is, well, "automatic" and is better than 1 chance in 10.

The decision to file a bankruptcy - is more complicated than any blog can discuss. The ability to automatically stop harassing telephone calls can allow decisions to be made in silence, and away from the demands of creditors.