Many people are ashamed of the idea of having to file for bankruptcy. For most people, the thought of filing for bankruptcy is the acceptance of one’s failure, however, it is nothing to be ashamed of. I have represented doctors, dentists, lawyers, veterinarians, business owners, retirees, and even students and all of them were ashamed of having to file for bankruptcy. However, from my view, the only ones who should be ashamed are the credit card companies that charge interest rates that are so high that it would be illegal for an ordinary individual to charge. It is against the law to charge more than 10% interest unless, of course, you are a credit card company. I have seen credit card companies charge as high as 79.9% interest rate; there is no cap!
Speaking of shame, health care providers, namely hospitals should be right at the top of that list. Many people declare bankruptcy because they had a simple medical emergency. For example, I had a client who was involved in an auto accident and was taken to ER for a check-up. After a few CT scans he was released the same day with a $39,000.00 bill. My client did not have insurance and had no way to pay back the hospital. Of note, a hospital would gladly accept $1,500.00 or so from a health insurance carrier for the same service.
Now one can argue that those filing for bankruptcy are irresponsible by spending on credit cards, or going about life without health insurance. However, we can’t judge them as we don’t understand their situation. These are life traps that some fall into either through their lack of experience, or desperation. However, the credit card companies and health care providers don’t make it easy with their predatory rates.
What are the common reasons why companies end up filing for bankruptcy?
There are several reasons, in general it is spending beyond their means. Credit card interests, lawsuits, health crisis, and bad business decisions are the most common reason why companies have to apply for relief in the Bankruptcy court.
When is negotiating with creditors on the cards? Why is a lawyer important here?
This is only an option if you can’t qualify for bankruptcy. Why pay anything when you can take advantage of your right to get a fresh start without paying anything back to the creditors. The same creditors mostly who are charging arbitrary and unconscionable interest rates that the average person can never afford to pay back.
What has lockdown taught companies in regard to managing finances and their company?
I think both individuals and business alike can now appreciate the term “rainy day”. It is crucial to set aside and save for at least 3-6 months of expenses in advance for that rainy day, just like a pandemic. Although pandemics may take place every hundred years, that unexpected lawsuit, or the unexpected health crisis is more common than one can think, and setting aside funds is an easy way to avoid an unexpected crisis.
Finally, what are your tips for new companies that wish to be best protected from any threat of bankruptcy?
Whether you are a business or an individual you have to manage your finances properly. The number one reason that I see business and individuals alike file for bankruptcy, is because they spend beyond their means. They put everything on the credit card with the hopes that they will pay it in the future, without really thinking about the unconscionable rates of interest that will grow every single month.
Law Offices of Sean S Vahdat & Associates, APLC
Lawyer in Orange, CA
1224 East Katella Ave. Orange, California 92867
Phone: (877) 698-2545
Email: sean@vahdatlaw.com
URL: .www.vahdatlaw.com
Attorney Sean Vahdat has been a licensed attorney since 2005, and has experience in the fields of Bankruptcy, Personal Injury, Employment Law, and Criminal Law.
Attorney Vahdat served as a law clerk for the Orange County District Attorney’s office in 2004. In 2005 he graduated Summa Cum Laude from Pacific West. He was a law professor from 2006 to 2009. He is now a full time attorney dedicated to helping clients protect their rights. Attorney Vahdat is licensed to practice law in California, the California federal courts, and the U.S. Court of appeals for the armed forces.
LAW OFFICES OF SEAN S. VAHDAT & ASSOCIATES, APLC is a well-rounded law firm in Orange California that provides a full range of legal services to both individuals and businesses. We take great pride as a full-service law firm committed to superior legal services. Our firm has over a fifteen years of experience, and we have dedicated our practice to the areas of Personal Injury, Bankruptcy, Employment Law, and Criminal Defence. We take pride in defending the rights of our clients under the laws of our great nation.
