What is the most common cause I turn away clients? They do not need to work harder to pay their debts. It is not because I believe they are dishonest. The most common reason I advise individuals against declaring bankruptcy is that they have nothing to protect.
That is sometimes difficult for individuals to comprehend. Bankruptcy law does not exist to safeguard those with no assets; bankruptcy law exists to protect those with assets. It allows individuals to preserve their assets and avoid losing everything.
A prospective client who is being harassed by debt collectors is a situation I encounter frequently. Her only source of income is social security, or possibly very modest employment income. She does not own a residence and has limited funds in the bank. Her only obligations consist of medical debt, credit card debt, and possibly overnight loans. She incurred these debts in good faith, but she will never be able to repay them.
This person should not file for bankruptcy, believe it or not.
First, filing for bankruptcy is not necessary to halt the phone calls: If she notifies her creditors of her inability to pay, they must cease contacting her in accordance with federal law (and state law for those in California and certain other states). If they continue, she could file a lawsuit against them.
Furthermore, even if the debt collectors suit her (which they still could), and even if they obtain court judgments against her, how will they ever collect? They cannot withhold her wages: Social Security is not garnishable, and her employment income is below the state-specific garnishable amount. She has no levyable funds in her bank account. She has no home against which they could place a lien. They cannot extract blood from a rock. She is immune to prejudice.
Alternatively, if she applies for bankruptcy, she will be required to pay a lawyer. She could be required to pay court filing expenses. Perhaps more importantly, she will not be eligible to file again for 8 years. What if she experiences a medical emergency and incurs additional medical debt next year?
If her circumstances alter, so will my recommendation. Suppose she regains full-time employment. Suppose a deceased relative leaves her a fractional interest in a piece of real estate. Now she must secure her assets. She now has a valid reason to apply for bankruptcy. She must be able to retain these assets in order to experience a genuine fresh start.
You may be in a comparable situation. Perhaps you lost your job and, after your unemployment insurance ran out, began using your credit cards to purchase groceries and pay your expenses. The lender claims you still owe them money despite the repossession of your vehicle. You've regained employment, but you're still burdened with debts. You believed that filing for bankruptcy was reserved for those at rock-bottom, not those on the ascent. That's not entirely accurate; bankruptcy laws exist to assist people like you.
" - https://www.affordablecebu.com/
