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Bankruptcy Law Blog

Friday, January 29, 2021

Bankruptcy Is Not A Moral Failure

When P.T. Barnum, the king of curiosities and co-founder of the self-proclaimed “Greatest Show on Earth,” went bankrupt, Ralph Waldo Emerson wrote that it showed the gods to be “visible again.” Emerson and many others were pleased that Barnum was in financial trouble because they disapproved of his money-making tactics.

Emerson’s attempt to tie Barnum’s bankruptcy to some sort of moral failure is perhaps fitting given that Barnum built his empire by exploiting racial differences, putting people with disabilities on public display, and committing outright fraud. Today, however, equating bankruptcy with some sort of moral failure is a mistake.

Bankruptcy Is More Common Than You Think

Going bankrupt is not something that happens to “bad” people. Instead, bankruptcy is a tool that all sorts of people can take advantage of when bad things happen to them. It is a lifeline for people who have fallen sick and will never be able to pay their medical bills. It is a reset button for folks who have lost a job, lost a loved one, or lost their way. It is a way for those who have taken business risks that didn’t pan out to start afresh.

When potential clients in the Mobile area contact our office, we don’t pass judgment on their character. What we do instead is work to understand how they got in the situation they are in from a purely financial perspective.

From there, we identify various paths forward and offer advice on which would be best. For most people seeking bankruptcy protection, there are two basic options — filing under Chapter 7 or filing under Chapter 13.

Chapter 7 is known as a “fresh start” bankruptcy case. In a Chapter 7 case, you give up certain assets in exchange for having all of your unsecured debts — such as credit cards and medical bills — eliminated. The case is typically closed within a year.

Chapter 13 bankruptcy involves a court-supervised repayment plan. Over a 3 to 5 year period, you repay all or a portion of your debt. You get to keep most of your property so long as you can afford to make payments on your debt.

There are benefits and drawbacks to both types of bankruptcy. Which one is right for you is something you should discuss with an experienced bankruptcy attorney from the Padgett & Robertson team.


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Padgett and Robertson assist clients with Bankruptcy, Personal Bankruptcy, Consumer Bankruptcy, Chapter 7 Bankruptcy, Chapter 13 Bankruptcy and The New Bankruptcy Law in Mobile, Alabama and throughout southern Alabama. Alabama State Bar Association Regulations require the following: "No representation is made that the quality of the legal services to be performed is greater than the quality of legal services performed by other lawyers." 11 U.S.C. 528 of the U.S. Bankruptcy Code requires the following: "We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.”



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Alabama State Bar Association Regulations require the following: "No representation is made that the quality of the legal services to be performed is greater than the quality of legal services performed by other lawyers." 11 U.S.C. 528 of the U.S. Bankruptcy Code requires the following: "We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.”