Consumer Bankruptcy Journal Spring 2017 - Page 8

Counseling Bankruptcy Clients About Guilt and Debt By Eric Olsen, Esq. Executive Director, HELPS nonprofit law firm Salem, Oregon A senior citizen called me recently, desperate. After months of skipping medicine and meals to make payments to a debt consolidation company, she didn’t know where to turn. She was scared, overwhelmed, physically ill from not taking needed medication, and quickly running out of macaroni and cheese. $400 a month, taken from her fixed income, left a big dent in her budget. I counseled this senior about state and federal laws protecting social security, pensions, disability, VA benefits, and other forms of retirement income. She understood this meant she couldn’t be compelled to pay the old debt. That HELPS could protect her from harassing collectors. When I asked if this helped relieve her stress, she admitted she didn’t feel right letting the law protect her specifically. Why? She felt guilty. Even though I now work with seniors and disabled persons who receive protected income, it is common for bankruptcy clients to struggle with guilt over being unable to pay old debt. Some of them are quiet and never mention it, but others are quite vocal about it, considering it a very moral dilemma. I believe it is good for bankruptcy attorneys to be reminded of this problem, and to be able to offer counsel that will help clients dealing with their guilt. The law defines guilt as moral culpability for an intentionally committed or premeditated act. Hopefully, our choices are guided by principles beyond the law, but it is good to recognize the intent of this concept. Life does not always wind its way around the path of our intentions. After having filed over 30,000 bankruptcies, I believe there are very few instances where persons incur significant debt with the specific intention of filing bankruptcy. Instead, it is a loss of job, illness, divorce, a failed business, or simply unwise decisions, among a myriad of other reasons, that results in people considering bankruptcy. It is not enough to simply tell someone not to feel guilty. I believe appropriate comments about guilt and debt can be part of every consultation regarding the decision to file bankruptcy. A person who files bankruptcy is not a “bad person” because he or she cannot afford to repay old debt. Bankruptcy clients can be advised that most lenders are businesses. Clients can be told that lenders know there may be circumstances when debtors cannot repay loans. When lenders loan money or give credit to consumers, they usually attach an interest rate to the loan. This interest rate exists not only to generate revenue for the business – but to protect lenders from possible risks. They know there may be circumstances when debtors cannot repay loans. While many lenders seek to capitalize on guilt to encourage repayment, loans are contracts made with the implied understanding that performance – repayment of the loan – may not be possible. Failure to repay outstanding credit card or old debt is never a crime in America. Enforcement of these loans may only be sought through the civil courts. When I counseled with clients for over three decades about bankruptcy, sometimes I found it helpful to explain the origins of bankruptcy. How in the original constitution, ratified in 1789, our forefathers gave congress the power to draft “uniform laws on the subject of Bankruptcies” throughout the United States. Although it took a while, Americans came to realize that we didn’t want the system that existed in Europe, where persons were thrown in jail if they couldn’t pay their debt. I would explain that bankruptcy laws were passed to give persons, honest, but unfortunate debtors, a fresh financial start. I would explain that Americans do not want the poor to suffer. Elected lawmakers, on federal and state levels, have repeatedly passed legislation 8 CONSUMER BANKRUPTCY JOURNAL Spring 2017 National Association of Consumer Bankruptcy Attorneys