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Are You Better Off With Bankruptcy?

By Cathy Moran

Bankruptcy trends meaningless

Who cares whether bankruptcy filings are up or down?

Bankruptcy professionals, certainly.

Economists, probably.

But if it’s you and your checkbook, you take little comfort that lots of others are filing.  Nor, when everyone else seems to be making it OK  while you flounder, are you reassured.

My colleague Wendell Sherk is right about bankruptcy following economic expansion.  Some expansion always falls flat.  Bankruptcy is the remedy.

And for the society, bankruptcy is a powerful remedy.  It allows risk taking without life-altering consequences.  It allows those who’ve made bad decisions or simply had bad luck to start over.

Bankruptcy evens the odds in  the eternal tension between borrowers and lenders, debtors and creditors.

Bankruptcy keeps people in the above-ground economy, allowing a legal and effective protection for future earnings.

Look backward or forward

But bankruptcy statistics are the sum of individual decisions.

Parents who have to decide whether being bound to past commitments is the best choice for their family.  Whether putting off providing for retirement, or even a cash reserve for emergencies is wise.  Elders who are saddled with credit cards they can never repay.  The underemployed balancing old debts and new needs.

It takes some courage to admit to yourself, and then to others, that you can’t do what you’d rather do:  pay everyone what you promised.

But, in the real world,  you are your harshest critic.

Few others sit in judgment of those who file bankruptcy.  If they notice at all, it’s with a sense of “there but for the grace of God...”

Better off with bankruptcy

A university study several decades ago concluded that one in seven American families would be better off if they filed bankruptcy.  It tried to explain why far fewer than that were doing what was in their best interest,  but instead struggled on with their debts.

The number who would be better off if they filed bankruptcy cannot be lower now.

In the end, it’s about what makes you more self sufficient going forward.

Image courtesy of Pixabay.

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Filed Under: Considering Bankruptcy, Consumer Rights, Pondering

About Cathy Moran

I'm a veteran bankruptcy lawyer and consumer advocate in California's Silicon Valley. I write, teach, and speak in the hopes of expanding understanding of how bankruptcy can make life better in a family's future.

Bankruptcy Basics

About The Soapbox

You’ve arrived at the Bankruptcy Soapbox, a resource of bankruptcy information and consumer law.

Soapbox is a companion site to Bankruptcy in Brief, where I try to be largely explanatory and even handed (Note I said “try”).

Here, I allow myself to tell stories and express strong opinions. We dig deeper into how to consider bankruptcy and navigate a bankruptcy case.

Moran Law Group
Bankruptcy specialists for individuals and small businesses in the San Francisco Bay Area

How Bankruptcy Works

What Happens To Your Bank Account in Chapter 13

Those considering filing a Chapter 13 bankruptcy worry about "what happens to my bank account?" Will the trustee take all the money? How do I pay my living expenses after I file? The short answer is: nothing changes. The account remains yours and available for all the expenses of day to day living. Because, … Read more

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