I'm sure that is no secret that I do not believe it is immoral to file bankruptcy. I have filed many Chapter 7 and Chapter 13 bankruptcies on behalf of clients in Indiana. As a result, I cannot say I believe it is immoral to file bankruptcy so long as you are unable to pay your debts and complete your bankruptcy petition truthfully. But since so many of the people I meet with at Halcomb Singler have moral objections to bankruptcy I wanted to delve further into why I do not believe bankruptcy is a moral issue in most circumstances.
I have said it before and I'm sure I'll say it again, if you can pay your bills and avoid filing bankruptcy then do it. Truth be told those who can pay their bills and not having financial difficulties rarely want to discuss bankruptcy. It is no secret that people want to avoid filing bankruptcy, and that is a good thing. If everyone in our country filed bankruptcy at every possible opportunity interest rates would be through the roof and it would be very difficult to obtain credit. But there is also no denying that bankruptcy is an essential part of our society. Things happen that make it impossible for debtors to pay their bills and creditors build the cost of bankruptcy into their prices as part of the cost of doing business.
Don't let your perception of morality prevent you from seeking the advice of a qualified bankruptcy attorney. Lets go back to when you took out a credit card that you are now unable to pay. If you are like most of my clients you opened the card years ago and used it for incidental expenses. For years you paid off the credit card at the end of the month or carried a small balance. Over time the balance grew and grew slowly and then a major event such as unemployment or illness pushed you over the edge and now you are choosing between paying your electric bill and providing groceries and paying the credit card company's monthly payment. Since you realized you wouldn't be able to pay the monthly payment you called the credit card company to see if you could pay a smaller payment in good faith, but were surprised to hear that unless you stop paying the card payment for several months then the company won't consider reducing the payments.
Now that I have taken you through a common scenario from a potential bankruptcy client's perspective, lets go through the perspective of the credit card company. The company sent you an offer for a credit card several years ago. You filled out the application and sent it back and the credit card company approved your application, sent you a card in the mail and set a credit limit for your card. The credit card company assigned your account an interest rate and sent you a bill each month. Over the years you paid the credit card company interest each and every time you carried a balance. The credit card company continued to check your credit from time to time to make sure you weren't a significant credit risk. If the credit card company thought you were becoming a credit risk they decreased your credit limit. If the credit card company saw that you got behind on other payments they likely increased your interest rate. When you did have a problem paying and called to work out arrangements they told you not to even bother sending in a partial payment.
Do you know why the credit card company does this? It's because they are a business and have a responsibility to their shareholders to make money. Every step the credit card company took in their process was aimed at making money. They approved you for a credit card with the mathematical expectation based on your credit history and income that you would carry a balance and also make you minimum payment forever. That is how the credit card makes the most money. They approved you for a credit card hoping that you would be their slave and give them a way to make an easy 10% on their money when most savings accounts are paying .4% interest.
Now lets go back to the prospective of a debtor again and why I don't believe that filing bankruptcy is a moral issue. At no point did you give a blood oath to the credit card company that you would pay them back or die trying. At the time you signed the credit card agreement you calculated that you could afford to make a credit card payment and factored your income and expenses into making the determination you could pay. Once the information you relied on to complete your credit card application was no longer the same as when you completed the application you were no longer able to make the payment. Now it's time for you to make a calculation. You either have enough money to make the credit card payment after providing food, shelter, and other basic necessities for you and your family. If you have the money left to make the credit car payment do it. If you don't have the money to make the credit card payment then don't. You can't pay what you can't pay. This is nothing more than a math problem.
I am not saying that you shouldn't do anything else to try to stay current on your bills. My blog postings are often about cutting expenses and increasing income through getting second or third jobs, but in my opinion, whether you can make the payment is a math problem and not a moral problem. Stop beating yourself up if your math problem comes up short and you see no way to solve the problem. Meet with a bankruptcy attorney in your area to discuss your options. If you live in Noblesville, Indianapolis, Carmel, Fishers, Tipton, Kokomo, Anderson or any of the surrounding areas and would like to meet with me at Halcomb Singler to discuss options in filing or avoiding bankruptcy call us at 317-575-8222 or click here and we will contact you for an appointment.
Halcomb Singler, LLP, is a debt relief agency. It helps people file for bankruptcy under the bankruptcy code. No attorney-client relationship with the firm of Halcomb Singler, LLP, is created through this blog. Also, please note that Erika Singler is an attorney licensed in Indiana and does not seek to practice law in any jurisdiction in which they are not properly authorized to do so. The information contained in this blog is general in nature and should not be relied upon for the circumstances of any individual(s) or businesses.
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