Here is a true story about bankruptcy, and the advantages it offers.
A
husband and wife team of practicing psychiatrists, with a joint income
of
$78,000 per annum, accumulate personal debts totaling $22,000, and
also have
outstanding a $33,000 mortgage on their com-fortable suburban New York
home.
They are not in arears, nor even over their heads. They simply seek
more
discretionary spending power.
Their solution to the problem? They file for bankruptcy and are able
to
immediately reduce their debt load to a mere 10 cents on the dollar,
repayable on an extended schedule in very small amounts. An officer
in one
of their finance companies notes that they could refinance the mortgage
or
even sell the house. But you will see in a moment why that was not
necessary.
Traditionally, personal bankruptcy has been a desperate last resort
for
those so deeply in debt and harried by creditors, that there really
seemed
to be no other solution. The typical profile included low-income,
undereducated
clerical workers or laborers, or perhaps transient non-homeowners.
Common age groups were those who were in their twenties, or those over
sixty
five years of age.
This is no longer the case. Today's profile includes people with good
jobs,
even families with two incomes. It is not surprising to find those
with
six-figure incomes declaring bankruptcy. The process comes no longer
out
of a dire necessity, but it is now a means by which people can rid
themselves
of debts that cramp their lifestyle.
The most common applicants for bankruptcy include recent college graduates
who file in order to avoid paying back government-guaran-teed student
loans.
Their rationale? They feel society owed them an education.
You will also find older, "keep up with the Joneses" types filing for
bankruptcy. For suburban executives to Wall Street professionals,
they are
unwilling to live within their means.
The passage of the Federal Bankruptcy Act of 1978 made the whole process
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