St. Paul recorder., 1963-09-05

they are fully able 20 pay.
Ironically, many a debtor finds
the cure more costly than it would
be to face the music and pay the
bills. Here Is what happens: II
costs upwards of 5000 in attorney
fees and court costs to file bank
ruptcy. Non-exempt assets (car,
sporting equipment, recreational
equipment, etc. are surrendered
and nquidated often at prices far
below their value to the debtor
Then there are certain obligations
which he must carry, even after
bankruptcy.
For example, there Is usually
mortgage on his furniture. This
debt is not discharged in bankrupt
cy. Often he owes money on notes
which a friend or relative has CO.
signed. He must either resume
these obligations or his friend will
have to pay. The same moral pres
sure is on him to resume any OBJ
legation he may have TO his credit
union, whose funds are the saw
ings Of his fellow workers.
He has surrendered his car, and
will have to buy another. It will
not only cost more, for equiv
alent value, than his old car sold
for; he will pay more for financ-
ing it, because he is now out Of
reach of Tow bank rates.. He
will be surprised TO learn that his
business is eagerly sought by deal
ers anxious to finance him despite
his recent bankruptcy. In fact
there are dealers who specialize in
seeking the business of recently
discharged bankrupts. OF course
the financing costs quite a bit
more.
If he Is not wary, he win quickly
be back in the same predicament
as before. This time las the 36-
percent lenders well know he
cannot get the protection of the
bankruptcy court. Not for six
years. Time for a lot of garnish-
ments.
So the cost Of bankruptcy, in a
great many cases, adds up to sub
stantially more than the relief OBJ
tained.
Wage Earner Plan bankruptcy
Is costly, too. The petitioner under
this plan pays $50 filing fees and
usually $3.50 attorney fees. He
files a cost-of-hving budget and
a schedule Of payments on his
debts which will be disbursed to
his creditors by a court-appodnted
trustee. In addition to the initial
costs he pays 5% to the trustee,
IL to the referees salary fund,
and whatever the trustees expen-
ses amount to.
The plan becomes effective when
the unsecured creditors approve 1t.
Secured creditors can either ac-
cept 1t or ask the court to release
the property which Is security for
the debt. While the plan Is in effect
creditors cannot proceed against
the debtor or co-dgner. More
over the creditors are genrally
very unhappy, because for one
thing the court holds their money
for six months before making a
payment For another, the court
OFTEN approves payment Of the en-
tire debt of a single creditor be-
fore payments are made to any
other creditor. Finally, the court
often continues to extend its pro-
lection to a debtor for as months
and for as long as a year after
the debtor has defaulted on his
payment plan.
The debtor VINO completes a
Wage Earner Plan may find him
self paying around 13 to is per
cent for the service. The one who
starts but does not carry through
may be paying as much as 40 per
cent, because Of the effect Of ad-
vance court fees and attorneys
charges. Many of those going into
the Wage Garner Plan have al
ready paid fees Of 16 to 20 per
cent of their total Indebtedness to