The Economy Is Good, But We May Soon Need to Better Understand Bankruptcy Again

Sep 22, 2018 by

When economic times are good, it’s easy to get a little too confident they’ll remain that good. That leads people to make riskier economic decisions, which at times can lead to great financial gain, but it can also lead to serious setbacks. Those setbacks can then pile up and derail your finances, even in the best economy.

It’s important, then, for individuals and for the economy as a whole that people become more familiar, once again, with what bankruptcy means.

To begin with, bankruptcy shouldn’t be seen as a taboo. Many successful people have to go through bankruptcy at some point in their lives. If used correctly, it can allow the individual the breathing space to regroup and become far more successful in the near future.

There’s a reason bankruptcy exists: it’s because it’s a net good for everyone. It provides the safety net for those who want to take risks, and it helps all of us avoid those serious economic consequences when people simply walk away from debts.

With that in mind, then, we ought to spend some time familiarizing ourselves with what bankruptcy means. Erin B. Shank, Attorney at Law has a great overview of the major bankruptcy chapters. As a general overview, these chapters are designed to provide assistance for different businesses and individuals. They are divided into chapters to allow the best conclusion for those in certain situations.

For instance, an individual who has accrued a lot of debts and has no way to pay them off, even over time, can file Chapter 7, which liquidates non-essential assets (your house, car, clothes, and such things are considered essential and are for the most part not included in the liquidation). Once assets are liquidated and creditors are as satisfied as they can be by this process, the person walks away debt free.

For those with a steady regular income, Chapter 13 might be a more realistic option. This chapter allows you to pay off debts through set fees taken from your wages over a certain period, usually 2 to 5 years.

Farmers and fisheries have their own chapter, Chapter 12, which is designed to make sure they don’t lose their land or fisheries. Chapter 11 is meant to allow business owners to reorganize debt without having to close their business.

As you can probably tell with a quick scan of the numbers, these are by no means the only bankruptcy chapters. Even in the best economy, everyone should be fairly well-versed in every chapter, so they know which ones might apply to them.

No one can be sure they’ll never have to face bankruptcy. It can happen to the most financially careful and practical people, as well as the biggest risk takers. Because it can hit any of us, we all have to be prepared, for the sake of our own finances and for the economy in general.

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