We ran across an excellent article regarding the state of bankruptcy in today’s political climate.http://www.mondaq.com/unitedstates/x/301900/Insolvency+Bankruptcy/Debtors+Delusions+of+Bankruptcy

The essence of the article is that unlike decades ago, when anyone that was upside down in their debt could easily file using a DIY kit and be relieved of their debts, today, bankruptcy is truly about relieving those that meet certain criteria.  Today, the courts are far more skewed towards “if you have the ability you have to make the effort”.

The article goes on to point out that many bankruptcy filings have been so spurious that they “have simply been remarkable wastes of time for our judiciary and generated unnecessary legal fees that needed to be paid to creditors.”  In a debtors rights based legal system, bankruptcy court actually gives creditors a legal forum to deal with recalcitrant debtors.  

This tends to cause a “backfire” for debtors attempting to abuse the bankruptcy court to get out of debts that they may be able to actually pay.There are several excellent case studies in the article that are long, and not appropriate for the blog forum here.  If you are considering bankruptcy as the “easy way out” and working with an attorney that is walking you down that path, the final words of advise are very clear, and should be heeded by the debtor.

“Finally, it should be noted that debtors cannot avoid the consequences of the bad advice of their lawyers. The Supreme Court has held that “each party is deemed bound by the acts of his lawyer-agent and is considered to have ‘notice of all facts, notice of which can be charged upon the attorney.”In other words, if a client gets bad advise from an attorney when seeking a bankruptcy that they really don’t need, there is no telling the courts “but my attorney said…”  “The remedy for bad legal advice lies in malpractice litigation against the offending lawyer.” Cannon-Stokes v. Potter, 453 F.3d 446, 449 (7th Cir. 2006); see also In re Gow Ming Chao, No. 11-38131, 2011 Bankr. LEXIS 4543, at *24-25 (Bankr. S.D.N.Y. Nov. 21, 2011)” 

There is no question that bankruptcy has a noble place in every civilized legal system.  Gone forever are the days of debtors prison and indebted servitude.  However as the pendulum swings on what is acceptable and not acceptable, bankruptcy now finds its place appropriately as a forum to ensure that if a creditor can be paid, they will be paid, and if a debtor truly is destitute and without means of saving themselves, they will get their due relief.
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