In the past, filing bankruptcy has carried a stigma that associates people with failure and being a deadbeat. This is far from the truth. Today, most Americans that are filing for bankruptcy are good hard-working people that got caught up in a credit debt bomb that exploded. Many people followed the lie that if they didn't buy a house now, they would never be able to afford one. Creditors would loan money to a dog based on stated income. It's no wonder that these people are facing bankruptcy and foreclosure at alarming rates.
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Many experts believe that the stigma was put out there by the credit industry. Mainly it was put out there by those in the debt collection area. They figured out that if they could make people feel bad about themselves, they could get them to continue paying with money they didn't have to avoid filing bankruptcy and having the stereotype of being a loser. There have been many stories of threats and lies that debt collection companies use to get a payment out of an individual. First, they try to befriend the individual and act like they understand their situation and that's why they are trying to help. This is the first lie. They could care less about the person being thrown out on the street with their kids, all they care about is getting a payment. Debt collectors get paid a percentage of what they collect and the more they get out of someone, the more they make. This is sad when an honest person has to choose between buying food or paying that bill, they get bullied into not eating. If the collector was a friend and really understood the situation, they would call back a week or month later and see if the situation improved to get some money. Some debt collectors have gone as far as to threaten a person with jail time for failing to pay their bills. This usually comes after the friendship phase is over. This is an outright lie as debtor's prison is no longer in existence.
The bottom line is, most people didn't realize that the gravy train would go off the tracks at some point. Most families believed that house prices would continue to rise along with their paychecks. All bets were off when the banks admitted failure back in 2007. Since then, many corporations have used bankruptcy filing as a way to renegotiate employment contracts, renegotiate debt with their vendors and so on. If the corporations and big business looks at it as a way to become financially stable, average people should have the same attitude about filing bankruptcy.
Now that the damage is done, people need to get their lives back on track and not be afraid of filing for bankruptcy if it is necessary. When the ends no longer meet, it's time to seek the advice of a bankruptcy attorney and see if something can be done. Filing Chapter 7 bankruptcy is best for those with large amounts of unsecured debt and can be completed in a short 4 to 6 months. On the other hand, Chapter 13 bankruptcy is best when trying to protect the family home from foreclosure. A Chapter 13 requires the individual and their bankruptcy attorney to submit a feasible repayment plan that will last 3 to 5 years to the bankruptcy court. Because the bankruptcy laws have become much more complex it's easier and best to use a bankruptcy attorney.
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