How Bankruptcy Can Free You from the Debt Trap

Posted by William Kain on March 28, 2017 at 4:24 PM
William Kain

debt-relief-in-mn.jpgMany people have misconceptions about bankruptcy and what it is designed for. Let’s shed some light on two aspects of bankruptcy. First, how bankruptcy protects us from malicious credit and debt collection harassment. Second, what a powerful financial tool bankruptcy can be to help you get your life back.

Our nation’s economy is built on the premise of free enterprise. This allows many companies (including third party lending companies) to shape their terms and agreements in a way that suits their best interest. And the companies can also shape the finance charges and penalties available to them in case a customer defaults on the arrangement. Many consumers rely on third party lenders for a variety of everyday needs and expenses. It’s comforting to know you can get financing with good credit in case something unexpected arises. But what happens when our credit tanks, these resources are no longer available and we’re stuck with an overwhelming debt problem?

Many who have faced this scenario quickly come to understand that there are separate terms and rates which apply to accounts that are in default. In many cases, these terms are designed to trap you and leave both your income and assets exposed to predatory lenders and creditors. Before we discuss how bankruptcy can tackle these problems head on let’s take a closer look at some of the tactics creditors utilize to trap consumers in debt cycles.

How Consumers Get Trapped:

Much of the financing and lending options available to consumers seems pretty similar across the board. At first glance most interest rates and monthly billings appear to be standard business practices throughout the industry. However, some creditors and lenders attach hidden fees and terms to these agreements which are put into place once your account falls into default. Sometimes they are already in place and buried in unclear and confusing disclosures of the terms and conditions.

Some accounts may charge monthly maintenance fees, transaction fees, membership fees, late payment penalties, and other unclear terms. These fees are not explicitly disclosed to the consumer in the hopes they will become indebted and trapped by the creditor or lender. This practice allows creditors to grow your debt beyond the financing extended to you.

In many cases, this grants them the right to go after your income and assets to recover what they claim is owed to them. This happens regardless of how deceptive they have been with the consumer in getting them to agree to these terms. For many consumers, this becomes a snowball effect in which payments on debts are made with other lines of credit and financing. Too many consumers end up financing their debt. Eventually all resources become exhausted. Unfortunately, the debts remain and have grown to unmanageable proportions.

Bankruptcy was designed specifically by the federal government to protect consumers from overwhelming debt and financial obligations. Often, bankruptcy can quickly do away with the vast majority of your debts. But your creditors don’t want you to take advantage of this financial tool. Creditors often perpetuate the stereotype of bankruptcy filers as being financially irresponsible while completely ignoring the fact that it is often their very own deceptive lending and financing practices which leads many Minnesotans to financial ruin each year. Bottom line, your creditors don’t want you to know that you can do away with these debts.

How to Get Free from the Consumer Debt Trap:

When your debts become unmanageable, your wages and bank accounts often come under attack. If you’ve been fortunate enough to still have some assets that haven’t already been liquidated to pay your debts, these too will be scrutinized by your creditors. Then not only do you struggle financially to satisfy the demands of your creditors; your health, overall well-being and the needs of your family become affected.

Here at Kain & Scott, our MN Bankruptcy Lawyers specialize in bankruptcy and only bankruptcy. We pride ourselves in our ability to provide exactly the help that you need to get your life back. Your creditors want you to believe you’re ducking out on your debt by utilizing bankruptcy. In reality, it’s usually the credit and financing industries lending practices which lead consumers to overwhelming debt problems.

Don’t be fooled into believing the negative stigma surrounding bankruptcy. This stigma was created by the credit industry to force their customers into honoring agreements they can’t manage and simply hide their own predatory lending practices which are designed to trap you in debt.

Topics: Bankruptcy