Someday despite the best of intentions we may find ourselves with such difficult credit problems we need protection from our creditors. It could happen even to conservative well-administered families when say a bread winner loses a job or because there’s an unexpected serious illness or because some other major event occurs that upsets the economic stability of the family. It can happen, and it HAS happened millions of times.
When a family finds itself unable to pay its financial obligations, it will discover that the “system” favors their creditors. In short, there are no acceptable reasons or excuses that have valid legal standing for non-payment of indebtedness. Therefore, no matter what the reason(s) for unpaid indebtedness might be, creditors are able to access the established legal system and attach valuable assets a debtor has or acquire a portion of the family’s limited current income, in order to satisfy a claim without regard for the impact those actions could have on the family.
In most states a creditor can proceed through the local Court system to obtain a Summary Judgment against debtors who have not been able to pay their debts as agreed. The process to do this requires on average 3 to 6 months depending on the workload of the local court system. What the creditor has to demonstrate is that a purchaser has failed to comply with a legal repayment agreement, that it has made a reasonable effort to collect the debt and that the debtor has refused or ignored the creditor’s collection efforts. When the Summary Judgment is awarded, the Court in effect is saying that it has reviewed the creditor’s claims and that it agrees they are valid. The creditor is then empowered to pursue remedy for collection of the debt under the law.
AFTER the creditor receives the Judgment award, the first thing it will do is look for any non-exempt assets the debtor owns. The only exempt assets in most states are the personal homestead and any future pensions and annuities. Everything else is up for grabs. If the debtor has equity in an automobile, the creditor will find it easily through state registration records and request that the local Sheriff’s Office take it away from the debtor in many cases without notice. If the debtor owns any art objects, jewelry, family heirlooms, non-homestead real estate, securities, personal businesses or any other assets of perceived value that come to its attention, the creditor has the right under the law to acquire that property in accordance with the established legal process to credit toward the satisfaction of the indebtedness.
Many states can also initiate a garnishment proceeding meaning that a debtor can be forced under the authority of the Judgment to make monthly payments out of current income if the Court concludes there’ll be sufficient income remaining to cover the basic economic needs of the family. The Court will define what those basic needs are, not the family. Many states won’t convey garnishment rights to the creditor if there are dependent minor children living in the home. But if a Christian is accustomed to giving tithes and offerings to a church or ministry, it’s likely that the Court will determine that the creditor’s claim has a higher priority and the related income will be granted to the creditor. In sum, the effect of garnishment is that a debtor family loses control over the disposition of its current income and is subject to ongoing Court regulation.
Creditors also have the right under the law once a Judgment has been awarded to require the debtor to appear in their attorney’s local office or by some other means to periodically provide updated affidavits under threat of perjury for false testimony as to the family’s current assets and liabilities. The family must comply with these requests for information until the Summary Judgment has been satisfied or until the Statute of Limitations has expired or until the debtor, should he/she be so disposed, declares bankruptcy.
One important aspect of the Summary Judgment that people should be aware of is that its effect is to substantially extend the statute of limitations on the collection of a debt. In most states the basic statute of limitations for debt collection is 4 to 7 years meaning that if a creditor hasn’t collected its debt by the expiration, it loses the right for further collection effort through the Court System. But, if that creditor has gone through a legal process to obtain a Summary Judgment, the effect is to extend the statute of limitations for an additional 15 to 20, or more years.
There are only two ways to protect one’s family from creditors once the legal system has validated their claims against a debtor: 1) to repay the debt either in full or by an agreed on settlement for a reduced amount or 2) to declare bankruptcy. In the Old Testament of the Bible, God’s original economic plan contemplated periodic forgiveness of indebtedness. Those times were called Jubilee years and demonstrated that the heart of God has always contemplated forgiveness. But today we don’t live under God’s system; rather, we live under the World’s system that gives little to no thought to forgiveness especially in the area of finances. One of the few aspects of the World’s financial system that even remotely resembles God’s system happens to be bankruptcy because the essence of it is to separate the debtor from his creditors, or in other words “to forgive” the obligations.
Now, this ministry has always recommended that debtor families consider the possibility of bankruptcy AS A LAST RESORT when it’s needed for protection from creditors. We certainly agree that every debtor should repay his/her debts if God provides the money. Indeed God will provide for our needs but He may or may not provide enough for debt repayment since indebtedness is not a biblical method of provision in the first place. So a debtor may have occasion to resort to modern Jubilee in order to protect his/her family which is a higher priority than the principle of repaying one’s debts. Even so when people DO have to go into bankruptcy, there’s nothing to stop them even years later from repaying their creditors when the money is available and under repayment terms controlled by the debtor.
As you consider these comments and other resources on this website, please keep in mind that our purpose is for you to become informed. This is not a substitute for an Attorney or for the legal advice that only attorneys can provide. We don’t give legal advice and we’re not trying to do that in this Article. In fact, before taking any actions or making any decisions whatsoever, you should confer with a Bankruptcy Attorney.
Don’t make the mistake of being impatient or fearful and moving too quickly. Call your Attorney as soon as you have read this Article and have browsed through our resources so you have enough information to talk intelligently and insure that the solution the attorney recommends is what’s best for your family. Bankruptcy attorneys know bankruptcy and they’re likely to assume that bankruptcy is what you want for your family or you wouldn’t have contacted their firm. But you need to know enough to “evaluate” what the attorney recommends in the same way you would test any other professionals and counselors. Bankruptcy attorneys have little to no experience with alternatives and options to bankruptcy that you have access to and it’s your responsibility to choose what’s best for your family. You don’t have to be uninformed and helpless when you go to meet your attorney and we know our resources will help you make the right choices. Most bankruptcy attorneys will not charge you for an initial meeting of about thirty minutes.
May God bless you as you deal with the situations in your life that caused you to access this section of our website!
As you continue your research, we recommend that you start by accessing an important Federal Trade Commission website through the following: Click to Go to Link
We have prepared a FREE Q and A summary of key issues compiled from commonly available information on the Internet. You could find this information yourself or review what we have summarized for your convenience keeping in mind that we are not attorneys and do not give legal advice. Please access the Q and A through the following: Click for Q-A
We are also making available an Interactive organizer
Bankruptcy Declaration Summary
You should prepare the following summary once you have decided to declare bankruptcy even before your first visit to your bankruptcy attorney. It is very detailed and your will have to do some work to put it all together. But you are going to have to do the work anyway so why not follow an established procedure and go to the attorney only once or twice instead of four or five times chasing after information you didn’t know you were going to have to have available.
Keep in mind that declaring bankruptcy is supposed to be very complicated and you will have to reveal all your personal financial issues to the Court. It is very important that you tell the truth in all situations and not try to hide something. If you are caught trying to mislead the Court, you could wind up in prison. THIS IS SERIOUS and Bankruptcy Court is not a place where anybody is going to want to play games.
One of the things people are always trying to get away with is hiding money or possessions from the Court. If the transfer of ownership requires related documentation, it will have had to occur at least 18 months or even longer BEFORE the Declaration of Bankruptcy. Otherwise, if the Court finds out about a recent transfer of value, it will be declared FRAUDULENT and a possible felony. Make your attorney aware of everything so that you get good legal advice.
If you have trouble with this Organizer, please feel free to call us toll free for clarification and help. We want you to succeed! You will notice that it an that you can fill in the information and then make a copy for your attorney.Click Here To Interactive Form