For many people who reach out to Bankruptcy lawyers Bankruptcy is not the best choice. This is because things change all the time. Take Mortgage problems as an example. Prior to the real estate crash of 1988-90, Banks would commonly “work out” a solution with people having financial difficulty. Then, during the early 90s, the Federal Government started suing and prosecuting Bankers to recover losses sustained in the bailout of banks. One of their strategies was to accuse bankers of unsustainable exercise of discretion. The result, Bankers stopped exercising discretion.
For nearly 20 years, people who had trouble paying their mortgages had little choice but to file for Bankruptcy. This was true, in part, because Bankers could not get in trouble for doing what a Bankruptcy Court ordered them to do. So, for nearly two decades, Bankruptcy was the automatic decision for someone who was facing foreclosure but who wanted to keep their home.
With the 2007 recession and resulting measures to facilitate recovery, the Government has signaled a more relaxed attitude toward finding solutions that work. So, even if there is no “program” to help with an individual case, the attitude in the Banking industry is returning to a more practical and realistic view. Hence, there are more people who may be able to work out solutions without actually having to file for Bankruptcy.
Having a Bankruptcy Attorney involved is essential to the process because that Attorney represents a credible posture and a source of realistic advice. Bankers are still required by law to try to motivate the Debtor to pay and they are not generally empowered to make deals on a discretionary basis. But, if you can access a decision maker with authority, it is more and more possible to achieve a work out. Having an experienced insolvency professional, a Bankruptcy Attorney, helps make the negotiating process more efficient and more effective.