The REAL Reason Why Creditors “Warn” Debtors about Filing for Bankruptcy

Many people who are entitled to file for bankruptcy (i.e. they meet all statutory requirements), and whose financial best interests would be served through a bankruptcy filing, nevertheless continue to wage war with creditors for many months — or often years — because they’re told that filing for bankruptcy would be the equivalent of hitting the “self-destruct” button on their credit score and long-term financial profile.

This is patently untrue.

Yes, filing for bankruptcy is a serious decision, and should never be made without research, analysis and due diligence — including expert counsel from an experienced bankruptcy attorney (i.e. be very careful with any so-called “advice” from well-meaning but poorly-informed family members, colleagues, neighbors, internet posters, etc.). But with this being said, filing for bankruptcy certainly isn’t the financial catastrophe that creditors claim; often through aggressive and harassing phone calls.   

So, what’s really going on behind the scenes? It’s not what you think!

Frankly, the reason that creditors “warn” debtors about filing for bankruptcy, is the same reason that shrewd kids who desperately want to go to Disney World discuss the prospect with their parents in an aloof, even apathetic way: it’s all about reverse psychology.

Most creditors really DON’T want debtors to file for bankruptcy, because when that happens (literally the instant that a file number is assigned by the court), all calls, emails, letters, text messages, and collections actions — including wage garnishment — must cease. What’s more, all creditors must “get in line” for payment, and must also follow a highly structured process that is overseen by a neutral court-appointed bankruptcy trustee (i.e. a trustee does not represent creditors and will not advocate for them).

Understandably, most creditors don’t want to wait many months (or years) to get what might be a small portion of what they’re owed. They’d rather bully and intimidate their way to getting paid in full RIGHT NOW — which, unfortunately, is what often happens when debtors mistakenly believe that bankruptcy is an absolute last resort. It’s not and has never been. Bankruptcy is a legal protection afforded to debtors, and created to help them (eventually) get a fresh financial start. 

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If you’re currently facing an unsustainable debt situation that is getting worse by the day as interest costs and penalties add up, then contact the Law Offices of Charles Huber today. We’ll help you determine whether filing for bankruptcy is in your best interests. If so, you can be assured that we’ll handle every detail of the process, from preparing and filing your paperwork with the court, to ensuring that your creditors follow all (not just some!) of the rules. We have over 30 years of experience in consumer bankruptcy. Our knowledge is your advantage.