Consumer Bankruptcy: More Harm Than Good?

Posted on June 10, 2011 at 3:49pm by

Do consumer bankruptcies really do more harm than good? Apparently so, according to tax attorney Stephen Dunn, which ignited a seven day debate recently with a Forbes blog post stating just that.

According to Mr. Dunn;

  • “Consumer bankruptcies [Chapter 7 in particular] do more harm than good.”
  • “Most consumer bankruptcies are pointless.”
  • Under the Fair Debt Collection Practices Act (FDCPA), a creditor will simply “stop contacting the consumer about a debt” at the mere “request of a consumer.”
  • “Creditors rarely sue consumers over debts.”
  • A creditor will “back off” by merely “threaten[ing] to file bankruptcy.”
  • Most debtors make “willfully false statements” potentially subjecting them to “criminal prosecution.”
  • It is commonplace that a debtor will “lose their house” through “unexpected consequences” of filing Chapter 7.

What ensued was, we admit, was entertaining. Not only was Mr. Dunn forced to spend the next several days fending off criticism (which surely didn’t come with too much surprise), but was blasted by no less than ten contributing attorneys in this article yesterday posted by Gerri Detweiler. Gerri wondered aloud about the number of “struggling debtors will read that piece and add it to the pile of misinformation they have gathered online about how consumer bankruptcy works.”

At The Sader Law Firm, we share contributing guest author Jonathan Ginsberg’s summation that “those of us in the trenches recognize that Chapter 7 and Chapter 13 relief, while flawed, usually [does] provide needed relief to beleaguered debtors who literally have no other options. Pointless and harmful? Hardly.” In fact, it has been our experience that also sides us with California’s Cathy Morgan who reasons that Dunn’s diatribe is “based on the tiny percentage of debtors who don’t play by the rules. 95% of Chapter 7 cases filed are no asset cases in which a debtor loses no property and discharges all of his debt.”

The Sader Law Firm prides ourselves on helping to provide a fresh start to good people. We have more than 30 years of combined experience in Chapter 7 and Chapter 13 bankruptcy cases and can help provide you with real financial freedom, minus the “parade of horribles.” If you live in Kansas or Missouri, contact Neil Sader today for a free consultation at (816) 281-6349 to learn more about the options available to you.



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