At the end of Back to the Future, when Doc is convincing Marty and his girlfriend to accompany him to the year 2015, he utters the famous phrase, “Roads? Where we’re going, we don’t need roads.” It gets you excited for the sequel, which does in fact feature flying cars. Yet, here we are living in 2020, and there’s not a flying car, hoverboard, or self-tying shoe to be found. For some reason, the future we imagined has yet to arrive.
At Hanson & Payne, we deal with this same disconnect between what is portrayed in movies or imagined and our current reality on a daily basis. There are many, many misconceptions about how bankruptcy works thanks to the way it is treated in popular culture. And filers often expect that the future will be much rosier than is likely.
Busting Bankruptcy Myths
Our firm works with individuals and families interested in declaring bankruptcy as well as Milwaukee area businesses that wish to do so. Both types of clients often assume that all the debts they have will be forgiven and that all the assets they have will need to be sacrificed in order to achieve that result. Both of these assumptions are wrong.
Not all debts are forgiven when a filer declares bankruptcy. Some common forms of nondischargeable debt are:
- Tax debts
- Child support, alimony, or other family support obligations
- Debts that are tied to a legal judgment like a personal injury lawsuit
- Student Loan debts, except in cases of undue hardship
- Fines for violating laws
- Debts that you forget to include in your bankruptcy application
Our firm works with filers to help them figure out what debts they will still owe if they file for bankruptcy. We also work with our clients to try and negotiate lower payments or some debt forgiveness from their remaining creditors.
The other bankruptcy myth that we are frequently asked to bust concerns a debtor’s assets. Many filers assume that they will have to give up or sell off all of their assets in order to pay off their creditors. While this is true in some cases, there are chapters of the bankruptcy code that allow debtors to go on a repayment plan and/or restructure their debts so they can retain possession of important assets. Our firm helps our clients figure out which chapter of the bankruptcy code will be most beneficial to file under considering their long-term goals. Just like a time-traveler, we work to ensure that the current you is not going to mess things up for future you.
Being Realistic About The Future
We are not optimistic that flying cars will be available any time soon, but that does not mean that radical changes to the vehicles we know and love are not coming our way. Cars today are safer and more fuel-efficient than ever before, and self-driving vehicles will probably be here before we know it. Being realistic about what the future holds keeps us from being too disappointed that Back to the Future Part II didn’t get everything right. It’s also an important lesson in the bankruptcy world.
It’s tempting to file for bankruptcy in hopes that doing so will help you get your life or your business back on track. However, it is important to remember that filing for bankruptcy is not the equivalent of waving a magic wand. If it is likely that things will get worse for you financially over the coming months, it may be better to wait to file until you have really hit rock bottom.
Declaring bankruptcy can only help you manage the debts you already have. It can’t prevent you from accumulating more debt, and it can’t help you with debts you rack up post-filing. Being realistic about what the future holds for your family or your business is therefore critical.
At Hanson & Payne we do more than help our clients fill out paperwork and navigate the bankruptcy courts. We provide advice and counsel that allows our clients to make good choices and chart a path forward. We look at debts of the past, our clients’ current situation, and even do our best to predict the future. We aren’t time travelers, but we are committed to helping Milwaukee area families and businesses survive and thrive during difficult times.