"I didn't realize how much stress I was under until I filed with you. I guess I had just gotten used to the feeling. My resolution is to think of need versus want and to save money each month for the unexpected." That is what a client recently told me after receiving a discharge in a Chapter 7 bankruptcy.
Dave Ramsey describes bankruptcy as a "gut-wrenching, life-changing event that causes lifelong damage." He also goes on to claim that bankruptcy "can devastate your job, destroy your marriage and steal your peace of mind." This type of Chicken Little mentality is unwarranted and may scare consumers away from becoming fully informed about all of their debt relief options.
Mr. Ramsey's message resonates particularly well with conservative and evangelical Christians. In my practice, I've come across far to many Christians who feel like they have failed in the eyes of God if they do not repay their debts. I devoted an entire blog entry to the topic to help those clients understand what the Bible really says about bankruptcy.
Mr. Ramsey's negative experience with bankruptcy is atypical. In my entire career, I have not had a single client express regret about filing for bankruptcy. I have seen marriages healed as a result of the stress relief achieved in bankruptcy. I have seen some clients improve their credit scores by as much 150 points because the individual no longer has any debt and their bad payment history will disappear over time.
Mr. Ramsey is correct that bankruptcy is not to be taken lightly. But for many people, it is the only away to get out from under crushing debt loads, lawsuits and creditor harassment. That is not say say that bankruptcy is without consequences. Yes, it will stay on your credit report for 10 years and it is only a temporary fix unless the debtor is willing to make the necessary life changes to avoid future debt problems. But for the vast majority of people who contact me, bankruptcy is truly the only option available.
The reality for my practice is that most of the people who come to see me have already done away with the toys and the frivolous spending. I’ve seen too many clients suffering heart problems, insomnia, depression and other stress related health issues by trying to avoid the inevitable for too long.
Sure, you can get a second job if you are $40,000 in the hole and you might have that debt paid off in a few years. But what do you have? You filled a $40,000 hole and several years of time spent at a second job, which means lost evenings with your family and weekends of kids events.
Or you might consider a Chapter 7, which would be over in about 4 months in most cases, learn to live without credit cards and get the fresh start now. For every Dave Ramsey who had a bad experience in bankruptcy, I can point you to dozens of satisfied clients who have benefited greatly from the fresh start provided by a bankruptcy discharge.
Dave Ramsey does offer value assistance in pointing people down a path of financial responsbility and I do not question those services. In fact, debtors who wish to avoid bankruptcy in the future could learn a few things from Mr. Ramsey. However, nobody should decide simply on my word or Mr. Ramsey's word alone. Cut through the hype and scare tactics and explore for yourself what is the best option for you and your family. After all, no decision feels better after you prayer, learn and investigate your options.