Oftentimes in my practice as a Colorado Springs Bankruptcy Attorney, I’ll meet with a couple who just don’t know what they should do about their overwhelming debt. Should they file a Chapter 7 bankruptcy or not? Just about nobody wants to file for bankruptcy. We’re told from the time that we’re little kids that it’s about the worst thing you can do.
Here’s what’s really baffling: No one batted an eye when American Airlines filed for bankruptcy a couple of weeks ago. For them it was a “business decision” that will allow them to eliminate some contracts and debt so that they can “emerge” from bankruptcy with a fresh start as a stronger company. It makes perfect business sense for American Airlines. There’s no moral stigma attached to their decision.
Yet when Colorado Springs couples come to see me about their overwhelming financial issues, they often fear the stigma of failure for doing the same thing. They incurred the debts. They’ve always paid their debts. But they realize it will be thirty years or more before all of their debts are extinguished — assuming that they incur no more debt and don’t fall victim to some medical or other financial catastrophe.
In the meantime, they’ve put away exactly zero dollars for the education of their young children. They want their kids to go to college. They know they should be setting up a college savings plan. But the money’s just not there. It’s going to pay Discover, Capital One, etc.
This young couple with young kids has obligations to both their credit card providers and their children. They can either pay Citibank or put some money away so their kids will have a better life. They just don’t have enough money to do both.
I encourage them to take the long view. Deciding whether or not to file for bankruptcy should be a “business” decision fro them, just like it was for American Airlines. Filing for bankruptcy and getting rid of their credit card debt will allow them to emerge form bankruptcy with a fresh start as a stronger family.
Something else to consider: American Airlines got into financial trouble even though it is run by highly educated people. You just know there are Ivy League MBA’s on their roster. Yet they found themselves needing to file for bankruptcy. And nobody suggests its any kind of ethical or moral failure.
Most of my clients have not had the benefit of a college education, much less an Ivy League masters-level education in finance. Should they feel bad for getting into financial trouble? Maybe a little. Should it prevent them from taking the necessary steps to get out of financial trouble? Not if it’s going to end up hurting their kids in the long run. As parents they have a duty to do their best to make their childrens’ lives better. For me, that’s a pretty good reason to take the long view.
Other non-Colorado Springs Bankruptcy Attorneys have also written about bankruptcy “K” words:
Photo credit: TooFarNorth