Understanding Bankruptcy
By Hilbert Morales
El Observador

In the Latino system of values, the concept of bankruptcy is often not known, not discussed, and in living our lives, avoided at all costs even as our personal bankruptcy may be occurring. What is often not understood is that being in a bankrupt state is a precursor to having one's home foreclosed or vehicle repossessed. Foreclosure and repossession is an indication that one is not able to pay which means that one is not able to be a consumer at our usual and customary level. We have to accept this reality when it begins happening. Denial often leads to further distressful complications.
Therefore, it is time in this day of enlightenment to look at the issues surrounding "bankruptcy".
First of all, the concept of being bankrupt has a legal definition, which is "A person (or business) who upon his own petition or that of his creditors is adjudged insolvent by a court and whose property is administered for and divided among his creditors under bankruptcy law. A criterion is that the individual (and business) is insolvent, which means an inability to meet all financial obligations. At a personal level there is a feeling of utter ruin and total depletion of income occurs. Basically, becoming bankrupt usually happens when one has not been disciplined enough or aware enough to fully monitor the resources being used to generate income, which pays the bills. In addition, current marketing practices encourage all of us to enjoy it now because we can pay it later. These marketing exhortations must be understood for what they encourage us to do, which is to "live beyond your means".
An important equation to understand is the following: "Your assets minus your debts equals your net worth." This statement requires an understanding of what money really is and what it really does. Money is nothing more that the license to perform and consume. Many define it as 'a medium of exchange' or 'value given for value received; or 'value transferred'. One must understand that individuals were able to promote a higher level of economic activity beyond bartering when the concept of money was developed and used universally. Money requires "full faith and trust" and is always supported by the U.S. Treasury Department.
In order for us to live in our complex society, each of us learns that we must have money. As a child, many never had an allowance, which permitted the initial experiences in dealing effectively with the use of money. This is the beginning of economic training. Many of us were raised in a family where everything was shared and what money was earned was used immediately to pay the rent, buy groceries, etc. So we acquired very little experience handling money in exchanges of "value given for value received'. As we grew up, we experienced public schools, attended churches, and other activities where the money exchanges were invisible to us. Others grew up with 'entitlements' where again, the money, which paid for them, was not evident to us. So many Latinos grow up being totally 'financial illiterates.' We have not dealt with money until we really had to do that. Many of us never really understood what being 'really broke' meant. No one related that state of being without money as being bankrupt. But one was 'broke' meaning that an inability to pay for or meet all obligations due existed in our personal affairs.
Today many in this community are bankrupt through no fault of their own. But, they became bankrupt by accepting loans at interest rates that were unreasonable (too low and/or too high) and not enough thought to repayments required. Well, our local economy collapsed; our national economy collapsed, and the world global economy collapsed. WHY? Basically, because "full faith and trust" requirements involved in transactions were violated at several points. Home values were too high and job security became much lower. Our economy's steady state of being was being changed by global competition, which was not recognized in our assessment of our own personal stability. Our industries focused on making money (profits) rather than maintaining full employment levels, which would sustain the American consumer economy and generated incomes for those well invested. The ordinary person, with modest means was unable to make money after loss of job. They became consumers who had no money to spend. Today we are all suffering some level of being bankrupt.
All of us need to know that laws and regulations exist which regulates what can happen to us when we are bankrupt. The first step is to acknowledge that we cannot pay our bills for whatever reason. The next step is to consult with an expert in bankruptcy law. Do this despite your cultural training and values. You must change your knowledge level of what being 'broke' means and know that you are not alone. It is not the end of the world for you because bankruptcy law is there to resolve today's challenges and give you another chance. But it does not totally eliminate your responsibility to change the way you handle your money. If you are having problems meeting your monthly payments, if you have over extended your consumption beyond your ability to pay for them, you need to consult a bankruptcy expert. He or she will help you understand bankruptcy.�