Bankruptcy carries with it a tremendous stigma that simply isn't well-deserved, according to some experts. While Michigan business owners and residents may believe that filing for Chapter 7 constitutes the end of the fiscal road, nothing could be further from the truth. Some experts believe that filing for bankruptcy can in fact be the smartest move an individual or business person can make, depending on their circumstances.
When the recession hit in 2008, bankruptcy rates across the country made a significant leap -- up to 1.1 million. As late as last year that rate had increased to 1.2 million, and experts are saying it's a fallacy to assume this is the result of poor financial planning or habits. Financial strife can hit anyone at any time, particularly when the entire economic system is facing challenges.
Understandably, many people are averse to the idea of declaring bankruptcy, but the reality is the alternative could be far worse. An individual who lacks the funds to pay bills and simply stops paying runs the risk of being sued by creditors -- a move that could lead to liens and wage garnishing, which takes control away from the debtor. Declaring bankruptcy can allow individuals to clear the slate and even to potentially have some debt forgiven, rather than being forced into paying it all back.
It is important for Michigan residents to not buy into the unfair stereotype of Chapter 7 bankruptcy being a last resort of desperation. In fact, it can be used as a tool in a smart financial future plan. Declaring bankruptcy keeps people in charge of their own existing finances and provides a route out of debt and toward a brighter future.
Source: CNBC, The good thing about bankruptcy, Sakina Spruell, Oct. 21, 2013