A chat with bankruptcy lawyer Brad Botes

Brook Highland resident Brad Botes has a message for folks who stereotype bankruptcy filers as mostly poor, minority or those with bad spending habits who just want to get out of debt.

Botes, who has been practicing with the Bond & Botes bankruptcy practice just off Lakeshore Drive for over 25 years, said bankruptcy doesn’t discriminate based on race or economics: It can strike anyone.

Botes, whose firm has offices in Alabama, Mississippi and Tennessee, said his clients have included business owners and doctors with million dollar homes, downsized workers on the verge of losing their homes, and middle-income individuals trapped by high medical bills.

In an interview, Botes talked about some of his past cases and shared information on a new Alabama law allowing bankruptcy filers to protect more of their assets.

Botes has a bankruptcy blog on his law firm’s website, bondnbotes.com.

Q: What are some of the biggest misconceptions and myths about bankruptcy?

A: Certainly everybody has in their mind who the stereotypical bankruptcy filer is until they get into money problems of their own. Most folks think that I represent deadbeats, they often make racial associations or associations based upon income. I’m here to tell you there is no stereotypical debtor. The people that come to me for help are members of my church, parents of my kid’s friends and typical people from our community. Nobody is immune from financial problems. I’ve represented surgeons, attorneys and many people involved in the real estate and home building industry over the last seven to eight years in the Birmingham area.

People who months before were living in half-million to million-dollar homes and making six-figure incomes have come to me for help. Too many people in our society today live from paycheck to paycheck, even those people making a significant amount of money. They don’t have a rainy day fund, and it takes just a little bit to push somebody over the edge into bankruptcy.

Q: I understand bankruptcy filers in Alabama today have seen a major development. Tell me about it.

A: Significantly, the state of Alabama in June 2015 for the first time in over 30 years increased the amount of property you can keep when you file bankruptcy. It was $3,000 worth of personal property; it is now $7,500. It was $5,000 in equity in a homestead; it is now $15,000. That’s $30,000 of equity in a homestead for a married couple or $15,000 of personal property for a married couple.

If someone’s been having money problems, with this change in exemptions in the state of Alabama, this is big and a good time to talk to a lawyer and see if money problems can be addressed. Things have gotten significantly better for people who have money problems in Alabama. If you are having financial problems and have been putting off talking to an attorney, now is the time to do so.

Q: What are some of the most common reasons for bankruptcies?

A: Medical bills, loss of employment and divorce are the leading causes of bankruptcy. Medical debt is the biggest reason people file personal bankruptcy. If you get sick or injured and don’t have good medical insurance, you can be overwhelmed with debt very quickly.

One of the most humbling experiences I had as a bankruptcy attorney was when a particular client came into my office for help. He was in his 50s, had worked hard, done everything right. Worked at a factory his entire adult life, provided for his wife and had a pension guaranteed by that employer. And then the factory shut down and the pension went away.

This gentleman had to take a job at a gas station just to support his wife. One day on the job he fell over and had a heart attack. He was rushed to a local hospital and thank God he survived. But his health insurance had gone away and the hospital that had treated him sued him for over $100,000. The man, a proud man in his late 50s, broke down in my office because he had to seek bankruptcy protection. Thank God he survived and thank God we were able to get that debt out from under him so that he could go on with his life.

Q: It has been 10 years since the Bankruptcy Reform Act was passed. It was designed to make it more difficult to file bankruptcy. How has it impacted the bankruptcy industry

A: We have seen a recent reduction in filings, but this has nothing to do with the change in the law. It has more to do with the fact that people are without work. If you don’t have a job, often there is no reason to file bankruptcy. If a creditor cannot garnish your wages, you don’t have much of a reason to file bankruptcy. Now as the economy is ramping back up and people are going back to work and beginning to amass assets again, it’s important to make sure that you deal with debt that may have accumulated in the past.