Skip to comments.Americans: Too broke to go bankrupt
Posted on 05/07/2012 8:01:47 AM PDT by crosshairs
This year, hundreds of thousands of Americans are expected to be too broke to file for bankruptcy. The average cost to file for Chapter 7 bankruptcy protection, the most common form of consumer bankruptcy, is more than $1,500, according to recent research submitted to the National Bureau of Economic Research.
As a result, anywhere between 200,000 and one million consumers are estimated to be unable to afford that steep cost this year. The research, conducted by a group of professors from Columbia University, the University of Chicago and Washington University in St. Louis, examined how bankruptcy filings spiked after people received their tax rebates in previous years. They estimate that another 200,000 consumers, who would otherwise not have enough money to file, will use their tax refunds to pay for bankruptcy this year.
"For lots of people, bankruptcy has been taken off the table as an option because of the severe fees involved," said Jialan Wang, co-author of the report. Among those fees is a charge of about $300 just for filing the paperwork with the federal court, while the rest typically goes to bankruptcy lawyers, said Wang. And there are other expenses on top of that, including fees for mandatory pre-bankruptcy credit counseling and a pre-discharge debtor education course. These average about $85 altogether, according to a recent study sponsored by the American Bankruptcy Institute.
That means many of the Americans who have seen their debt snowball out of control due to events like job loss, foreclosure or a medical emergency during the economic downturn are now left without their last financial lifeline, she said. "It becomes harder and harder to pay off the debt as interest payments get higher, so your debt grows larger and larger," she said.
(Excerpt) Read more at finance.yahoo.com ...
The folks who want to go bankrupt should just get some ca$h from 0bama’s sta$h.
This is what Hope n’ Change looks like.
yeah no one wants to pay their lawyer but their cell bill, the cool sneakers, the gold chains, those are necessities
What am I missing? If you are too broke to go bankrupt, and can’t pay the court costs and the required course and attorneys fees, then what? If you are truly broke, how can you pay your bills? They can’t get blood out of a turnip can they?
I understand such people will face wage garnishment and other legal actions if they can’t do the bankruptcy. But, if they have wage garnishment, then it means they have a job and are earning money. And if they are earning money, wouldn’t they then have a source of funds to pay for the bankruptcy process?
I personally know somebody who went bankrupt, and he paid the attorney over a period of six months before they went to court. But, in that six month period of time, his attorneys worked to stop garnishments and other legal actions against him.
I guess I’m missing something.
The government will give them cell phones, cable and food. The banks will take a couple of years to take their houses away, meantime they can live tax and rent free.
You know what they say: “Owe the bank a million and they own you. Owe the bank a hundred million and you own the bank...”
If you are a Bankrupct Lawyer - do you imagine you’ll take a case of someone who will “pay you later”, or do you take his money before you file on his behalf?
Once the Lawyer accepts some ‘fee’, he is your legal counsel - and as such will do what is in YOUR best interests. Face it, the banks have teams of lawyers and they are under no obligation to ensure that your rights are not violated, in fact they happily dance all over your rights. You just aren’t aware of what your rights are, and they are under no compunction to inform you.
What the bankrucy does, it is enables you to start fresh - without the bills. Without a BK ruling, those Visa bills, your house that was foreclosed, that car that was ceased - those bills can all come back to hit you (plus interest, fees and whatever other charges are allowed in your state) years later, down the road. Just when you think you have recovered - you will get a collection notice, and be utterly destroyed .... again.
At one time, Bankrupcy was used to abuse the system. Buy a new home, declare bankrupcy and keep it. “Thanks for the free house, car, truck, boat and home theater system, suckers”. Today, it’s a way for someone to escape perpetual indebitedness with no means to recover.
The lawyers are going to have to let the people file on credit which will go against their credit report if they don’t pay up.
Hundreds of thousands of U.S. children have lost the security of their first homes because their unemployed parents could no longer pay the mortgage. Many of us know such families.
If the opportunity arises, be certain to let the children know that the government took their homes away, because Fanny and Freddie bought 95% of all the mortgages that banks underwrote during the housing bubble. They are the entities behind the foreclosures.
The children of the Foreclosed Era may grow up to have a more intelligent opinion of government power than the imbeciles in the Occupy movement do.
oh no they’re not.
Believe it or not, lawyers aren’t all “rich” and have groceries to buy and mortgages to pay.
If you want to file, you pay your fee up front and then the lawyer will file.
I was being sarcastic, just forgot the tag.
oh lol ok
Can’t they just take out a consumer loan to cover the bankruptcy charges? Hell, Obama is probably also trying to figure out how to tell his leeches how to get that free Gubment money to pay for it.....trick is how to make it look like a tax rebate for all that money they made working hard.
There's also job loss leading to foreclosure that can't be forestalled by bankruptcy due to lack of income. And then the market rate rents are higher than the mortgage was ... welcome to homelessness for you and yours.
I'm watching it happen with someone right now.
This might answer your question:
Jailed for $ 280. The Return of Debtors’ Prisons
“That means many of the Americans who have seen their debt snowball out of control due to events like job loss, foreclosure or a medical emergency during the economic downturn are now left without their last financial lifeline,..”
Or that they simply overspent. Heck, I just overheard a co-worker on the bank borrowing $70K for a NEW CAR! When I asked how she and her hubby could take on such a risk to their well being, she just muttered “what’s the worst that could happen? If we get into trouble, we’ll just file BK.”
Yet, in 25 years SSIP will be “means tested” and to translate, since I am living like no one else now, I will be receiving less than folks like this. If I receive anything at all. No one will care about the YEARS of sacrifice, they will just say I got luck to be wealthy.
they are building a huge constituency for a Debt Forgiveness Lobby.
In some cases, yes. I know someone who took out a 401k loan to cover Ch 7 bankruptcy last year.