A LOT of people who don’t have a clue about how bankruptcy works are sometimes too quick to judge others who find bankruptcy as their only option to get out of debt. These people think that filing bankruptcy is something they will never do because it is ‘wrong to run away from your responsibilities’.
This idea that all people who file bankruptcy are financially irresponsible is very wrong. Yes, in life we are responsible for the consequences of our actions but we all make mistakes. Sometimes all it takes is one big financial mistake to mess up everything that we have worked so hard for.
Take the case of a client who ended up filing bankruptcy after an investment property he bought turned out to be a money pit and a financial nightmare. After having saved some money to start investing in real estate, he made the mistake of buying property in bad part of town where it is difficult to keep good, paying tenants.
After taking out a second mortgage for $80,000 to fix up the property, he couldn’t keep good tenants and for all the time that the property was vacant, he had to continue paying the mortgage without any rental income.
As what he thought was a temporary fix, he started getting cash advances from credit cards to make the mortgage payments. Eventually, he ended up losing the property in foreclosure after he could no longer keep up with the payments. He tried selling it with no luck. The second mortgage holder sued him for the $75,000 and credit card bills were piling up. After realizing he had no other way out, he filed Chapter 7 bankruptcy.
Was he ‘financially irresponsible’ under the circumstances? I don’t believe so. He started out with good intentions. The two banks were happy to give him a loan because he had excellent credit. Unfortunately, things did not work out as everyone expected. His goal was to save for retirement by investing the money he had saved up his whole life but his dreams went up in smoke.
Had his investment become a success, all parties involved would have been happy. The banks would have made their money and he would have achieved his dream to own rental property. But life often doesn’t go as planned and we are hardly ready for the unexpected.
Yes, there are situations where a financial disaster could have been avoided with proper financial planning- but that is not always the case. In my 20 years of practice as a bankruptcy lawyer, what I’ve seen is that bankruptcy is more often than not caused by circumstances beyond one’s control.
Life offers no guarantee that we will never face a financial struggle even though we are doing our best to honor our financial obligations. You can get sick, go on disability, lose your job, have your business fail or face an unexpected divorce.
This is what our bankruptcy laws are for. They are here to help the honest debtor who just needs a fresh financial start to rebuild again after financial ruin. They are NOT for people who are only interested in taking advantage of the system.
Bankruptcy is not always your fault. If you are currently in a big financial mess and don’t know where to turn for help, I would like to help you. Call us for a free consultation at Toll-Free 1-866-477-7772. We have offices in Glendale, Cerritos and Valencia.
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None of the information herein is intended to give legal advice for any specific situation. Atty. Ray Bulaon has successfully helped thousands of clients in getting out of debt. For a free attorney evaluation of your situation, please call Ray Bulaon Law Offices at TOLL FREE 1 (866) 477-7772.