Hey everybody, John Skiba here from the Arizona Consumer Law Group. I am also founder of the Consumer Warrior Project that provides resources to people that are facing serious debt problems.

You can learn more about that by going over to the website ConsumerWarrior.com. On today’s video I wanted to talk about something that I find a little bit humorous, a little bit disappointing, and that is going through the comments that I receive over on my YouTube Channel, to the different videos that I put up about dealing with debt problems. And while most things are positive, you know, periodically I get comments that people really kind of throw their opinion as far as what they think of people who are in … I did a while back about you know what you can do if debt collectors are getting over aggressive as far as the way they’re dealing with you on the phone. And this one commenter said that he has another, in his comment he said, he’s got another tip on how to avoid aggressive debt collectors, pay your debts and stop spending what you never F%#$ing earned” is his comment.

And while that comment is not helpful in any way whatsoever, and I’m sure this person was very proud and somewhat smug that they had this great insight to just pay your bills and then you don’t have to deal with debt collectors, I wanted to go over why I think that comment is not only stupid and idiotic, but why it doesn’t really see the big picture of things when it comes to debt collection. And to do this how I wanted to frame it is really to show you, and tell you some of the experiences that I’ve had over the last 14 years of representing consumers and families in serious debt problems through things like bankruptcy, debt collection, and lawsuits. Now when we look at bankruptcy specifically, we can look at that because there’s a lot of statistics and studies that have been done on people who have had to file for bankruptcy.

Many people have this stereotype or this thought in mind of the person who’s filing for bankruptcy is just this person who is out on, you know, just irresponsible, just on spending sprees with credit cards, and going on vacations, and buying things that they don’t need to buy, and then they can’t pay their bills and so, hey, get out of jail free card, let’s just file for bankruptcy, and you won’t owe anything going forward and then you can start the whole process again later when you get some new credit cards. I can tell you as someone who meets with probably three to six families per day every business day of the week, and talks about these types of things, that almost never happens.

I can probably count on, you know, one hand how many times I’ve met with people who’ve actually taken that approach to life, and are that irresponsible. It’s actually much more serious things that lead people to things like bankruptcy, and I wanted to go over really what I see as some of the top reasons and also some of the reasons that have been pointed out on various studies. Now the number one thing that we see as to why people file for bankruptcy often has to do with medical debt.

That there’s some kind of large medical issue that they’re dealing with and that’s resulted in just overwhelming expenses. And this is backed up by a recent Harvard study that said that medical expenses played a role in 62% of bankruptcies. And something that’s also interesting is of those 62% of people that are going through bankruptcy because of the medical debt, 78% of them had health insurance. So just because you have health insurance doesn’t mean that you’re going to be immune from having just these overwhelming debt, or debts coming from medical expenses. So the number one reason that I see, and that the studies have shown now, that people file for bankruptcy is because of an unexpected illness and the medical expenses associated with that.

The second one is job loss, and I’m going to throw into this, business owners. People who own their own business and the business has failed for some reason, or someone has a job and they lose it, that they have unemployment. This is a big one as far as, you know, most people don’t have a lot in savings. You see the studies that most Americans live paycheck to paycheck, and so an unexpected job loss or the failure of a business for those small business owners, often can lead to a bankruptcy just because there’s overwhelming debt.

The third one that I see, it’s a big one is divorce. When couples go through divorce, you know, there’s a division of debts and assets. It almost inevitably leads to bankruptcy by at least one of the spouses, and what I have seen, it’s kind of a domino effect. If one spouse files, the other one typically ends up filing anyway. I won’t go into whether you should file before or after the divorce, if you’re going to file for bankruptcy in connection with a divorce. Another topic for another day. But I can tell you that divorce often leads to bankruptcy as well. I will throw in there, you know, just poor use of credit.

Poor judgment as far as spending habits of people. But like I said, this is way down on the list and it’s probably mixed in with a bunch of these other things. You know there’s some medical expenses or there’s a job loss, and because of some poor decisions earlier on it makes it more difficult to be able to kind of weather that storm. But I would dare say that all of ushave made some poor financial decisions. Even my man here that left the comment saying just to pay your bills and then you don’t have to worry about all these debt issues.

That’s true but it’s a little more complicated than that. And the reasons that people file for bankruptcy are a lot more complicated than that. So that’s kind of my take on the overall as far as why people end up in this situation and one of the things that I think people should be grateful for is that there are bankruptcy laws. We kind of take that for granted that there are these statutes, this kind of do-over, this get out of jail free card, if you will, that allow you to start over and get that fresh start that people talk about with bankruptcy.

If we didn’t have those laws, ya know, who would be willing to start a business. You know, what would happen if these medical expenses, if they were just piled on a person, they could never escape that, you know, they’re dealing with something for the rest of their lives. You can just see that without the ability to file bankruptcy, how much more difficult in general it would be and how much less risk adverse people would be as far as being willing to open businesses and things like that. So the laws serve a purpose, they absolutely help people.

It’s not for every situation, you know, I always say that. And it’s something where that a bankruptcy attorney needs to sit down with you and go over your situation, and let you know if it’s something that’s actually going to benefit you in the long run. So, that’s going to do it for today’s video. I appreciate you watching.

If you want to learn more about the debt collection process and things that you can do in dealing with overwhelming debt and serious problems, head on over to ConsumerWarrior.com. You can also head over to my YouTube Channel and read more of the comments like the one that I talked about today as far as what people’s thoughts are and some of the things that they’ve done that have helped them with their debt problems. So, again head over to ConsumerWarrior.com. You can find links to these videos, podcasts, articles and a bunch more different resources that could help you. Thanks for watching today.