Recently, there was an editorial written in a financial magazine by a pro-creditor attorney. Obviously he's very biased by whose signing his paychecks. In this article, the attorney labeled all consumer bankruptcies under Chapter 7 and failed to mention Chapter 13 bankruptcy. This attorney, in true pro-creditor fashion basically tried to enlighten its readers by building up creditors behaviors.
In this article, the attorney gave a bunch of useless and untrue information about filing bankruptcy. The first thing discussed was how credit card companies rarely sue debtors over their unpaid debts. You can just ask anyone filing for bankruptcy and they will tell you that at the time of filing if they weren't in the process of being sued the creditor was threatening it.
The next morsel was how when an individual files for bankruptcy it automatically triggers an audit from the IRS. Once again, this is far from the truth. Even the government knows that an individual filing for bankruptcy isn't a good candidate to come after. Most people in bankruptcy don't have any property left that would be easy to liquidate post bankruptcy filing. The IRS knows that if there was something there that was easy to grab, the bankruptcy trustee would have already gotten a hold of it.
Some more words of wisdom included was when creditors threatened to sue a debtor, commonly the debtor will flex their muscles with a breach of contract or fraud suit back at the creditor. Most people in extreme debt are pretty beaten down in their minds filing bankruptcy is a last resort. Usually, a debtor is in no place financially or emotionally to stand up and fight against an aggressive creditor.
Other nuggets of information that were discussed were how a creditor can challenge a debtor when filing bankruptcy, regarding the dischargeability of their debts. To a certain extent this is true. But in actuality, this rarely happens. When an individual files for bankruptcy, the creditor will need to prove fraud by the debtor to make the debt non-dischargeable. The creditor has to prove that the debtor had intent and had knowledge of a pending bankruptcy filing when they charged on the account. This is next to impossible to prove and a huge waste of time and money for the creditor. Like in many things, cost outweighs the reward.
The bottom line is, this attorney wrote a story assaulting the reasons of why consumers should not waste their time filing bankruptcy. Although he tried to make good arguments, it seemed more like a negative bankruptcy bashing story. Also the author downplayed the role of a bankruptcy attorney and how they help consumers get out of debt. The article painted an inaccurate picture of how people file bankruptcy because a bankruptcy attorney told them to and not because they are buried under crushing debt.
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