When you file for bankruptcy, don’t worry about what to lose, but about what you get

For the past 20 years, our culture has been flooded by American business. There has been this perception in our society that the guy who dies with the most toys wins. Everyone looks at their neighbor and covets the things they have acquired. People spend a lot of time daydreaming about that new car they’re trying to buy or even that new 80-inch flat-screen TV they saw at their neighbors’ house while watching the Super Bowl. The banking and credit industry has made these dreams possible by allowing people to buy these items by going into debt. Now, people are forgetting what they owe and are looking for a solution to borrow more to double and get more. Our grandparents would be rolling in their graves if they saw the virtues they taught previous generations crumble. Not long ago, Americans saved money and prided themselves on being debt free. The new line of thinking is that you are wasting your available liquidity if you are sitting on the equity in your home. Take advantage of everything so you can have more.

All of this has been perpetrated by the credit and banking industry. They did their homework and paid Madison Ave. billions of dollars to make their agenda come true. Even people who need to file bankruptcy have been brainwashed into believing that they are a failure if they do not pay the debt. Furthermore, creditors want debtors to believe that if they file for bankruptcy they will lose everything they own. They will do whatever it takes to keep a debtor in bondage to a debt they cannot pay. These ideas are far from the truth and that is why Congress enacted generous bankruptcy exemption laws to allow an individual to protect a certain amount of property. If someone files for bankruptcy and loses everything, it would be almost impossible to have the fresh start that bankruptcy promises.

When filing for bankruptcy, a person will be required to complete a bankruptcy petition. There are different attachments to the petition, one of which lists an individual’s property. In this schedule, the court requires the person filing bankruptcy to list everything they own, from shoes to pots and pans. When filing for bankruptcy, they can use an exemption to protect different amounts of property. This is where an attorney becomes a great help to someone filing for bankruptcy. The bankruptcy attorney will know the ins and outs and what the local bankruptcy administrator will allow for exemptions.

During this time, the person who files for bankruptcy must value all their assets. The bankruptcy code requires a person to value the property at replacement cost, taking into account the age and condition of the object. Most people use the old exchange formula, although it is not what the code allows, but for many trustees it is acceptable.

When it comes to insured property, it is time for the person applying to do a real soul-searching and decide whether or not they will be able to continue making payments on that property. If it’s a mortgage, when you think about it, you need to have a place to live, so as long as you can afford it, it could be a debt that you would consider reaffirming.

When it really comes down to it, people facing bankruptcy shouldn’t put all the blame on their own shoulders. Sure they overreached, but in many cases banks misled these people into granting them credit knowing that this person would probably never be able to pay it back. Most of this debt is packaged and sold in the portfolio on the derivatives market to some unsuspecting investor. This is one of the reasons why the real estate market virtually collapsed in 2008 and will do so again like these same people who have just redoubled their previous mistakes.