WEIRTON - Consumer bankruptcy filings may have leveled off, but an attorney who specializes in helping people get out of debt says too many people wait much too long before they look for help - and when they do, they don't always turn to the right place.
Attorney Roger Isla, who recently relocated to 3618 West St., said there are too many misconceptions about bankruptcy.
"A lot of what I do is try to educate the public about the dangers out there from people who are basically trying to rip them off," he said. "A lot of the debt settlement companies turn out to be fraudulent. For example, say you owe $30,000 in credit card debt and you go to a debt settlement company. They'll tell you they can settle your debts for $10,000, but they won't make any payments until you accumulate that much. Meanwhile, they're charging you a lot of money ... so all you did was give people your money, they took a fee for holding it and you still end up getting sued, it provides you no protection at all."
A bankruptcy attorney, on the other hand, is tasked with "going in and dealing with peoples' debts." A lot of times that means filing for Chapter 13 bankruptcy, which allows filers to reorganize their debt.
Chapter 13 bankruptcy is strictly for individuals and typically gives filers fiscal breathing space: Debtors don't have to pay all their debts back, "only as much as they're able to pay." For some that might mean 50 cents on the dollar, for others it might be more.
"There are certain tests to determine how much you can pay," he said. "One of the ironic things about bankruptcy is if you reorganize under Chapter 13, your standard of living often goes up. Most of the time, the credit card company has been dictating what you have to pay - if you have a lot of debt, you have to live on what's left over and sometimes that's not enough to buy proper clothing or food. So what ends up happening in reorganization is we form a budget that's reasonable, that has all the necessities (but) nothing extravagant, then you pay the difference to the credit card company. It turns the whole dynamic around."
Isla said he's had clients emerge from bankruptcy in two years "and pay 100 percent of their debt back, and I've had people in bankruptcy for five years and only pay back 5 percent," he said. "It just depends on individual circumstances.
"While you're in bankruptcy, nobody can sue you," he added. "You are protected by the bankruptcy code - that's a huge advantage. A debt settlement company often will give you legal advance but it's bad advice - they'll tell you don't pay any more money, pay them and they'll put it in an account for you and try and settle your debt. The problem is, by the time that happens, your debt's doubled because you haven't paid on it for three years."
Isla, too, says the general public tends to equate bankruptcy with failure, "and it's just not the case. The safety net exists for a reason. Sometimes people get in bad circumstances - they get divorced or lose their job or have a medical catastrophe.
"There's no shame in filing for bankruptcy," he adds. "The only shame is not looking (for help) and letting the credit card companies take advantage of it."
He said all too often, a bankruptcy attorney is the last place people look for help "but should be one of the first."
"People will take money out of their 401K, their IRAs, their pension plan to try and take care of debts when they could have kept all that and reorganized, then they could retire and not be paupers in retirement," he said. "People don't know it, but the government wants people to have a decent retirement, they don't want them to rely on Social Security."
Isla also handles domestic relations, criminal defense and personal injury cases.
"A lot of people have the misconception that they'll lose their house, their car, everything, but it's just not true," he said. "You can keep your house, you can keep your car as long as you can continue making payments on it. People are fearful, that's why a bankruptcy attorney is the last person they come to see. When they think bankruptcy, they think they'll be turned out with the clothes on their back, but the opposite is true - reorganization rehabilitates you and turns you back into a happy, productive member of society. I've had people tell me they wish they'd known it before they blew 25 years of savings in a (way) that wasn't going to help them."