BOO!!

It’s that time of year again—when the days get shorter and darker, the leaves fall, a cold wind blows, and our thoughts might turn to mortality as we reflect upon another summer come and gone. In fact, in almost all mid-latitude and northern areas, since time out of mind a date has been set aside in autumn or late summer to venerate departed ancestors. China has the Hungry Ghost Festival, Mexico and Latin America (via the Aztecs) have the Day of the Dead, Korea has Sije, Christianity has All Souls’ (or Saints’) Day… and kids of all ages have Halloween.

Halloween is a way to lighten up such a dark subject.  Think about it: we take the scariest subjects and make them into jokes, replete with funny tombstones, dancing skeletons, laugh-inducing ghouls. Children, ordinarily terrified at the thought of ghosts and witches, gleefully enjoy the company of as many such characters as possible—and even dress up like them!

This reminds us that fear can be alleviated by the proper attitude. If you find yourself in dire financial straits, it’s no laughing matter—but the fact is, there’s nothing all that scary about bankruptcy. Avoiding bankruptcy out of fear is a classic example of letting “fear itself” (to quote FDR) dictate your attitude. In truth, bankruptcy is one of the best ways to escape the fear caused by a once-in-a-lifetime crisis.

Here are some examples illustrating the last point:

Fear of Harassment by Creditors

Once you file, you are protected by the “automatic stay”—an injunction against creditors, who cannot bother you during the course of the bankruptcy unless they make a motion to do so and the court grants it. In fact, if a creditor violates the stay injunction, there’s a good chance you can get the court to award you damages for the violation (though it may depend on how egregious the violation has been).

Fear of Losing Your House

Although some people are hopelessly “underwater” in their mortgage, many bankruptcies result in a renegotiation with the lender (that is, a loan modification). It is often in the lender’s interest to let you stay in your house rather than to foreclose and go to the trouble of selling at a discount. In fact, new state and federal laws make the loan modification process more accessible, and oblige the lender to make a good faith effort to mitigate your losses.

Fear of Damaging Your Reputation

Part of the bargain of bankruptcy is that it is “transparent.” To ask for the benefits of bankruptcy, you must be willing to publicly disclose your financial situation.

But how likely is it that anyone you know or meet is going to sign up with the electronic file service and request your records? If you’re struggling, that fact is already reflected on your credit reports—which are often accessed by potential employers anyway. It’s hard to see how you could look worse by taking the responsible step of filing for bankruptcy.

Moreover—and far more important—there is not really much of a stigma about bankruptcy anymore… particularly given the universal crisis of the past five years. The majority of personal bankruptcies are rooted in outrageously high medical bills. Often, bankruptcies are due to the great American entrepreneurial spirit; small businesses have a high failure rate, but where would we be if no one were willing to risk failure? And, of course, many people have been victims of the housing bubble.

DON’T FEAR “FEAR ITSELF”

If you think bankruptcy might be a good option, give the Mlnarik Law Group a call at (408) 919-0088. We’ll be able to quickly assess your situation and determine the best path for you to take. When those creditors come in their scary garb and shout “trick or treat,” you can have a good laugh—and, if you’re feeling generous, maybe let them grab a mini Snickers bar!