June 25, 2018

Has “Financial Repression” Stopped You from Filing Bankruptcy?

paperworkpileEditors note:  In this compelling post, Charleston bankruptcy lawyer Russ DeMott describes what he calls “financial repression” – the tendency of honest, hardworking men and women to delay or forego bankruptcy protection because of the administrative and expense burdens added to the bankruptcy filing process by the 2005 BAPCPA changes to the bankruptcy laws.

When you meet with your bankruptcy lawyer, you’ll be given a lot of information.  You’ll also be given many tasks to complete before you file your bankruptcy case.

Our new bankruptcy law, BAPCPA (Bankruptcy Abuse Prevention and Consumer Protection Act), created a tremendous amount of busy work for debtors.  You must complete a credit counseling session prior to filing your case, you must provide the trustee with the last tax return you filed, and you must give your bankruptcy lawyer six months’ worth of pay stubs, just to get started.  There’s lots of work to be done.

Debtors are already stressed out when they come to their lawyer’s office.  The law is often confusing.  There are many new terms thrown around: CMI, DMI, discharge, First Meeting of Creditors, 341, 362, median income, means test, trustee, and on and on.  Even if they have a lawyer who explains things well, there’s a large amount of new information to absorb.

On top of all this, they must provide their lawyer with numerous documents.  Some of these are easily accessible; some are not.

In my Charleston, South Carolina bankruptcy practice, I have noticed that many clients seem worn down by this process.  We regularly check on open files to notify the clients of the information we need to file their cases.  Sometimes they respond, but sometimes they don’t.  It’s as if they believe that if they ignore the financial mess they are in, the problems will magically disappear.  They won’t, of course.  In fact, they’ll continue to get worse.

I call this financial repression.  Like any other repression, it delays a resolution.  Whatever the problem is, it doesn’t get solved.

I know financial problems are stressful.  And I also know clients feel overwhelmed and beaten down.  To be honest, I hate asking my clients for many of the documents I have to request.  Much of the information is, as my high school history teacher would say, merely academic.  I need the information to fill in a spot on a form, even though it’s really not relevant to their financial situation.

russdemottBut I didn’t make these rules.  And your bankruptcy lawyer didn’t, either.  Think of the process as just a bunch of hoops you must jump through.  The Credit Industrial Complex, as one of my colleagues calls it, wrote much of our bankruptcy law.  The goal of the new law—or at least one of its primary consequences— was to make the process expensive and miserably labor-intensive.  But if you allow yourself to repress your financial problems, you will be letting your creditors win.

Roll up your sleeves, start digging for those documents, and give your lawyer what he or she asks for.  The sooner you do that, the closer you are to getting the fresh start you need and deserve.

About Russ DeMott:  Russell A. DeMott is a bankruptcy lawyer representing clients in Chapter 7 and Chapter 13 bankruptcy cases.  He practices in Charleston, South Carolina.

About Jonathan

Jonathan Ginsberg represents honest, hardworking men and women in the Atlanta area who need personal bankruptcy protection. In practice for over 25 years, Jonathan teaches bankruptcy law and practice at legal continuing education seminars and he is a founding member of the Bankruptcy Law Network. Jonathan lives with his wife and children in Atlanta.

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