Why You are Not The Problem

Bankruptcy is BIG. According to some estimates more than one in every twelve eligible Americans living today has filed bankruptcy.  One in twenty eligible people filed bankruptcy just in the years between 2000 and 2006. During that period approximately 11,000,000 (eleven million) people filed bankruptcy. The population of people eligible to file bankruptcy was approximately 215,000,000.  These are staggering numbers.

The saddest part of it is that most of these people feel like filing bankruptcy was their fault, like they had some sort of personal failure.  That is a tragic misconception.  Even if you cold have done things better, you are a victim of a much larger problem that is hitting good honest people all across the nation; the combination of economic crisis and predatory lending.

The Economic crisis is hitting us all. The college degree we got isn’t doing what we were told it could do when we took our student loans. We did what we thought was right and what everyone told us was right and it didn’t work. Now we are stuck with low income and huge debts.  The job we worked at doesn’t pay us enough to make ends meet. Our husbands and wives are losing jobs and benefits every day.  We have no money for medical care. We get sued or fined or have some other mishap and we are ruined, with no cushion.  Our social security doesn’t cover the bills and we have to rely on credit cards. Our business income went down for some reason and we have been pouring our savings and labor into it, to keep it alive, but it is just dying and we can’t afford to keep it alive. Our kids need money for food and college and we feel like we have to provide the money, even if we have to use credit cards, because we don’t want our kids to be disadvantaged.

Do these scenarios sound familiar? These things are the products of Economic Crisis. Whatever you hear on the news, these scenarios are reality for many, possibly even most Americans. Now, combine the Economic Crisis with predatory lending. And it is the recipe for disaster.

Predatory lending is when a lender (like a credit card company or a mortgage broker) prays upon people’s weaknesses or lack of information.  They try to get teenagers to open credit cards. They offer credit to people they know are going to have a hard time paying the money back.  They get people to refinance into a plan they can not afford. Why do they do this?  The salespeople want a quick commission. The folks behind the scenes y want to hook consumers into paying a lot of interest. Credit Card companies don’t just want to be paid back.  They want people to pay back a LOT more than what was borrowed. They make it so hard for you to repay the loans, and they are so aggressive with collections, that you end up feeling abused by more than just sky-high interest rates. Then, all the hard earned money you send to your credit cards just goes to cover the inflated interest. They get you on a hook and keep you there as long as they can.  That is predatory.  To make matters worse, for the past decade, homeowners have turned their houses over to predatory mortgage brokers, so they could refinance to pay off predatory credit card companies. The hard working consumer has literally been thrown to the wolves.

It is unjust for people, who act in good faith, to have their lives ruined because of economic crisis or predatory lenders. That is why the United States Congress offers a way out for people who run out of options.

The way out is Bankruptcy. The smartest and richest people in the country understand that lenders just see them as numbers.  Wealthy and educated people use bankruptcy all the time without shame as a financial tool.  The hard working, regular people are left paying high interest and feeling guilty about trying to get out of the situation. The credit card companies want you on their hooks and they don’t want you to know how to get off the hook. It is a terrible mind-trick done by the creditors. That is why so much misinformation about bankruptcy is pumped out to the public.

The crisis is systemic, having economic hardship is not something you, the consumer, should feel bad about any more than you should feel bad about getting caught in a bad storm.  Until consumers are given access to clearer and better information, or until lenders are better regulated, millions of good people, like you, will continue to be caught in this perfectly terrible storm for debt, with bankruptcy as their only life-boat.

David S Waltzer JD, MPA

David S Waltzer is a bankruptcy lawyer practicing law in New York and New Jersey. He owns the Law Offices of David S Waltzer PC (Waltzer Law Group) a firm that specializes in bankruptcy and negotiation. He can be contacted at [email protected]