Myth #6: Only Deadbeats File for Bankruptcy Protection
This is the big one. And it is about as far from the truth as can be.
The vast, overwhelming majority of the people who file bankruptcy are good, honest, hard-working people, just like you and me, who file as a last resort. They have spent months or years struggling to pay the bills left over from some life-changing experience, such as a serious illness, the loss of a job, separation or divorce, a failed business venture, or some family emergency…or because they honestly and mistakenly fell into debt at a young age before they knew better…before they knew anything about budgeting or how to manage money.
A study by Professor Elizabeth Warren of Harvard Law School found that over half of all bankruptcies are related to illness, and 75% of those people who end up filing because of medical bills have health insurance. Nearly 9 out of every 10 bankruptcies are caused by events out of people’s control–illness or death of a family member, job loss of job change, separation or divorce. And the most important fact about these events is that none have anything to do with fiscal irresponsibility, lack of intelligence, lack of hard work, or anything other than something bad happening to somebody good.
In my experience, almost all of my clients want to repay their debts…they just can’t. And the credit card companies, collection agencies, mortgage companies and other bill collectors aren’t willing to work with them so that they can.