Bankruptcy and Debt

Most folks do not wake up one day, and decide it is time to hire an attorney and file for bankruptcy.  It is usually through no fault of their own, that someone’s debt has reached that stage. Interestingly, most bankruptcies (48%) are the result of medical bills, injuries or accidents no covered by insurance companies. The next reason people file for bankruptcy is high credit card debt, due to a loss of a job, divorce, high inflation (not being able to make ends meet), Covid-19 or having to take care of an elderly parent.

That is why a debt settlement program, such as the one offered by Debt Relief LLC, is the best alternative to filing for bankruptcy. Why?

  1. The most important one is your credit report.  A bankruptcy stays on your credit file will ruin your credit score for seven to ten years.  This means that any credit you apply for after filing for bankruptcy, will require you to pay much higher interest rates, than what the market currently bears.  In addition, you run the risk of not having been approved at all for the credit you are applying for.
  2. You may not discharge any taxes you owe.
  3. You may not discharge any student loans you owe.
  4. You may not be able to file if you make too much money. You now have to go through what is called a “means test.” (More on that next)
  5. You are required to take financial management courses. Ugh!  Having had to file for bankruptcy myself, over 30 years ago, before this “means test” was mandatory. I just wanted it to be done and over with. I had just had my fifth child, I had been “downsized” from my job, and had to apply for food stamps at the time.  If that is not humbling, I do not know what is. However, I can honestly tell you the last thing I wanted to do is take financial management classes.
  6. Lastly, filing for bankruptcy It can be expensive!

Perhaps some of you know…

…however I am guessing that most of you don’t know, that the banking lobby in Washington D.C. is one of the most powerful lobbies ever created!! Back in April of 2005, they were responsible to pushing through the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), which simply put, made it a lot harder for consumers to file for bankruptcy protection. The bill, which then Senator Joe Biden helped push through was a crushing blow to the middle class in that it made:

  1. A new “means test” was established to determine whether folks who were experiencing a financial hardship, such as high credit card debt, were now subject to eligible to file for Chapter 7 bankruptcy.
  2. Those that did pass the means test were required to take courses in financial management.
  3. However, the worse part of the bill was the prioritization of credit card debt repayment over child support repayment. This then forced women who were owed back child support to negotiate with credit card companies first rather than concentrate on the debts owed to them by their former husbands.
  4. Finally, the word “debtor” written in the old law was changed to “household” in the new law. This then led to a completely new means test, which now has to take into account the earnings of an entire household, rather than just one debtor.

It was a bad law all the way around, with the exception of big banks who benefitted tremendously from this.

If you remember, it was the big banks that received TARP (The Troubled Asset Relief Program) monies under the so-called government bailout, while everyday Americans got hammered by a recession, the housing market turned upside down and numerous job losses, when the economy went sour. Basic American received nothing! Let me repeat that, nothing, other than this bad law that Mr. Biden and debt cronies pushed through, so his state, Delaware would become the “home” of most of the major banks/creditors.

Since Mr. Biden is now our President, he will not have to answer questions about this horrendous bill at the moment, or any others he was a part of in Washington.  Suffice it to say, regardless of your political position, this Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) was bad for the average Joe, such as you and me.

That is why I strongly urge folks to look at our Debt Relief program. If you or anyone you know could use help with high amounts of credit card debt over $20,000, Debt Relief, Inc.  could be your solution. Simply call us toll free at 800.000.0000 MST, or visit our web site at and fill out a form to have us contact you if that is more convenient for you. Either way, one of our professional advisors can assist you in understanding how a debt relief programs works.

I also wanted to give you, what I thought, were some interesting statistics about filing for bankruptcy in the United States.

Statistics show that the average person who files for bankruptcy is married, has a least a high school degree, and makes under $50,000 per year. Those with a higher education, 4-plus years of college, accounted for approximately 22% of bankruptcy filings.  Senior citizens are the highest rated group filing for bankruptcies, mostly related to medical bills.

Student loans do not enter the statistics for bankruptcy as they are considered semi-secured, backed by the U.S. Government, and therefore not eligible for bankruptcy today.

Bankruptcy and Debt

We have written many articles on Debt Relief here on our: Debt Relief Blog