J. Crew filing for bankruptcy on May 4th is a signal that getting relief from debt that is impossible to repay is no longer out of style.
Over the years of my practice, one of the most notable emotions that I have experienced is the hesitation of individuals, even when facing crushing debt, to obtain their legally available avenues of relief from debt. This reluctance is based on antiquated stigmas and, quite frankly, outdated lies about the effects of bankruptcy and the bankruptcy system.
When someone is injured, one of the first things they do is seek a lawyer to know their legal rights to seek financial relief from the economic damage caused by their injury. When someone is facing divorce, they usually want to make sure the available laws work for in their favor to limit the financial consequences. Why should it be any different when it comes to saving oneself and one’s family from the long-term damage that un-payable debt causes?
The rich and the educated do not hesitate to contact bankruptcy lawyers or use bankruptcy laws to their advantage. In April of 2009 in the heart of the last Great Recession, Chrysler filed for bankruptcy relief. This relief would allow them to emerge financially healthy. General Motors, realizing that their crushing debt would put them at a competitive disadvantage, filed for bankruptcy about one month later. These are companies that are led by, in some cases, ivy-league educated managers and financial officers.
Although it is noteworthy that these highly financially literate people guided their companies into the situations where they needed bankruptcy relief, it is more noteworthy that they quickly took advantage of the bankruptcy laws when it helped their companies to survive and (in the cases of the auto manufacturers) quickly revive.
Some people irresponsibly put themselves into financially compromised positions, but I have found that most of my clients were not personally responsible for the conditions that sank their financial plans. It is certainly not anyone’s fault that unemployment is now at historic highs, just as it was not the individual’s fault for the financially irresponsible Wall-Street sub-prime lending that caused the great recession 14 years ago.
It is perplexing that individuals, when facing the same kind of unescapable debt, do not take advantage of the laws available to put themselves into a position to financially revive and eventually thrive. One thing is for sure: with the leading of J. Crew filing for bankruptcy as a result of the coronavirus, bankruptcy relief is no longer out of fashion.