Debt is an issue that affects the majority of Americans, and it carries with it a degree of shame in a social context. Strangely, Michigan residents who choose to deal with their debt issues by filing for Chapter 7 bankruptcy are also affected by this shame, because it is perceived that a bankruptcy filing is a negative thing. While it presents a number of unique challenges, a bankruptcy filing can actually be beneficial to a financial future in the long run.
Forgiving or erasing debt is infinitely preferable to simply failing to pay out what is owed. A failure to pay leads to a downward spiral of mounting debt that, when combined with crippling interest rates, may never be paid off. Filing for bankruptcy allows that debt to be wiped away, allowing a revenue stream to be directed at any remaining debts that are exempt from bankruptcy, such as student debt.
It is often believed that a bankruptcy filing is a sure way to destroy credit ratings for all time, but of course this is a hyperbolic belief. While bankruptcy definitely takes a toll on credit rating, it is possible to rebuild that rating through smart fiscal decision-making and saving strategies. Some people even go on to buy homes based on rebuilt credit, proving that bankruptcy is not the end of the world some people believe it is.
Chapter 7 bankruptcy can be a scary option to consider, but as Michigan residents are becoming aware, it does not constitute a failure on the part of the person filing. Quite the opposite -- it can be a positive step toward a more secure financial future. The erasure of debt goes a long way towards financial independence for those who take that step.
Source: Yahoo Finance, First Person: 20 Years After Bankruptcy, I???m Still Debt Free, Laura Quinn, Nov. 7, 2013