Bankruptcy: Your Ace In The Hole

By Author: Harris Symonds
Total Articles: 121
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It’s a fact. It’s not your grandfather’s bankruptcy anymore.

That is to say that bankruptcy, once riddled with all sorts of complications, not the least of which being the societal implications. Today it’s a different process than it was years ago. In some ways it is more difficult – declaring bankruptcy can no longer be considered an easy way out for extravagant spenders. But the impression it leaves – on everyone from family and friends to creditors and stakeholders – is not as detrimental as it used to be. It could actually be your ace in the hole.

Because of the economy, people who may have, through no spending fault or flaw of their own, come across hard times via unemployment, medical expenses or the loss of valuable stocks and bonds, are now entitled to having these financial problems eased – or wiped out entirely – while starting anew.

True, it is harder to file for bankruptcy these days and harder to make a clean sweep of bad debt if you’ve been too extravagant. As an example, you now have to pass a means test to make sure you meet certain qualifications. Companies will go back ...
... through financial records to find out whether you’ve been spending on luxury items well past your means or whether you’ve been frugal because of your financial situation. If you still have a tube TV, for example, and drive that 30-year-old Volvo, you’re ahead of the game.

The number-one benefit of filing for bankruptcy is that your unsecured debt will go away, i.e., credit card debt etc. Under Chapter 13 bankruptcy you would be required to use your income to repay some or all of your debt, and you’ll have to prove to the court that you can afford to meet your payment obligations. If your income is irregular or too low, the court might not allow you to file for Chapter 13 bankruptcy.

In Chapter 7 bankruptcy, the bankruptcy trustee cancels many (or all) of your debts. Happy days are here again, right? Well, there is a downside. The court may also decide to sell (liquidate) some of your property to pay your creditors. But by that point, you might be looking at the world through a different set of lenses. Perhaps you’ve shouldered a financial burden for too long and need to see light at the end of the tunnel.

There are many ways to look at bankruptcy and unless you talk to a bankruptcy attorney you won’t be able to determine which category best applies to you. But whatever happens, bankruptcy can give you a new lease on life and lift your financial burden as well as your spirits. It’s a good alternative to have if there are no other alternatives.

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