Interviewer: When people come to you for help with bankruptcy, emotionally what state are they in, you know, what’s going on in their lives that let them to do this per se?
James Logan: Most people come to see us are facing financial difficulties of one sort or another. Most people are filing chapter 13; chapter 13 is a reorganization payment plan bankruptcy and it allows people to stop foreclosures on their home, set up payment plans and get caught up on their mortgages. That’s the most common type of bankruptcy that we do here. A lot of people are buried in credit card debt and have garnishments, have law suits going on against them and they come to see us about that quite a bit. People with tax problems come to see us; if you got IRS debt, there are some different things we can do in a bankruptcy and even outside a bankruptcy to help you with that but the vast majority of the people that come to see us are facing some kind of financial crisis of one sort and another and mainly for one of three reasons: Divorce, illness and job loss.
The Loss of Employment is One of the Major Reasons Why People File Bankruptcy
Of course, job loss is a big one in the last few years of the recession. Even the people who’d gotten back to work are still getting back to a job that pays less than they were making before. And so, financial stress is very difficult in a marriage. When you get behind in your bills, you may see people start to fight with their spouses and that leads to a lot of problems and instead of having two incomes supporting one household, you’ll have two separate households, which is a lot more expense to be maintained, and that’ll cause people to fall behind. If you’re sick and you can’t go to work, then it’s pretty hard to keep up on your bills there.
People from All Walks of Life Resort to Filing Bankruptcy for a Host of Different Reasons
Interviewer: Do you find that when people come to you, they’re at the end of their rope? Is this like a last resort for them or do they tend to, jump on the bankruptcy idea and go with it sooner rather than later?
James Logan: We get people at all points of the spectrum. A couple of years ago, Bethlehem Steel shut down after probably 75 to 100 years in Baltimore. And at one time, it employed almost 50 to60,000 people but over the years, they shed jobs and it just slowly declined and it finally closed up about two years ago. I did have several clients come in who just lost their jobs there and they realized that there’s no way they’re going to be to keep up with their bills, so they kind of proactively filed bankruptcy and they see the writing on the wall and trying to get ahead of the curve.
Some People Try to Tackle their Problems Early on by Filing Bankruptcy whereas Others Wait Till the Last Possible Moment
So, some people do see the writing in the wall and they file bankruptcy to prevent a lot of these problems. Other people will wait till the last possible minute. We get calls from people when houses are going to auction the next day and then, they’ll come in and we could help them out as well. So, anywhere between those two extremes, we’ll get people. It’s kind of a distribution. A few people at the very early, a few people at the very end and most people when they get sued, there’ll be 60 days before the get a judgment entered and they’ll come and see us then, or if they have an auction coming up in a month or so, they’ll give us a call then.
It is Advisable to File Bankruptcy Early on So as to Avoid Accumulation of Debt and Other Issues
Interviewer: Do you find that it’s better for people to wait till the last screaming second to file or is it better to file as earlier as you can when there’s trouble?
James Logan: No. It’s much better to file earlier on, because once you get to a certain point, it’s like a snowball rolling downhill. Once your debts get to a certain point, you’re never going to be able to pay them off and at that point, you may as well do the bankruptcy instead of waiting because all waiting does is causes stress in your marriage, causes people to take money out of your bank account, you set up payment plans and you’ll throw away a lot of money and you’ll still end up owing money. A good example of that are the debt settlements that people will do, most of the debt settlement companies are scams because they’ll just take the money and apply to their fees and none of the money ever goes to your creditors.
Most of the Debt Settlement Companies are Scams that End up Aggravating the Financial Situation of Clients
Over and over again, I see people that pay six months or a year into a debt settlement plan and say they owed $20,000 and they’ll pay in $500 a month for six months or a year, they pay in 3, 4, 5,000 dollars and then they fall behind in the payments and they get kicked out of the debt settlement. Now, they’ve wasted that money and they still have these debts and the credit is still ruined. So, it’s better to be more proactive because once you get to the point where you can’t pay the bills, it’s just going to snowball and get worse from there.