Many people I come in contact with have one question in mind – should I declare bankruptcy? They have worked themselves into a financial mess and they feel the only way out is bankruptcy. Little, if any, research is done personally on what the process, outcome , or real impact of the bankruptcy would be. However, the thought of a clean slate, financially, is so attractive.
I do not advocate bankruptcy. It has been my experience that most people I meet are not bankrupt. In most cases people are bankrupt-able, but they are not bankrupt. They could work their way out of their situation, but they know it will take time and it will take much effort. As a result, the bankruptcy path is the one they choose. Chapter 7 or 13 – which is the best?
It always puzzles me why people would prefer a chapter 13. While the legal protection provided is one aspect to consider, chapter 13 is really an organized debt consolidation/repayment plan. It surprises me when I learn of the chapter 13 filing and likewise find the the filer has never contacted their creditors to see if a structured repayment plan could be agreed to prior to the bankruptcy filing. Yes, this is a difficult task – but was it ever sought?
Bankruptcy is a tool that can be effectively used and we should all be thankful that the option is there. But have you explored other options? If you could get on a repayment plan that you negotiated with your creditors would it be better than a bankruptcy filing on your family and future?