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The Right Approach to using Bankruptcy to Deal with Debt Problems

Bankruptcy! The mention of this word can dredge up some very negative associations for many people. We often think about bankruptcy as being representative of someone – or some corporation – that has been irresponsible with finances and is looking for a way to instantly escape all of their financial problems. And sure, there have been cases of people using bankruptcy haphazardly over the years. Oftentimes, though, people wind up filing for bankruptcy to deal with incredibly hard circumstances and scenarios. The loss of a good job, medical problems and even divorce can be incredibly trying in and of themselves. And these types of situations also tend to lead to extreme financial hardships for thousands of people every year. It is folks who are going through these types of situations, compounded by big money problems who can often benefit the most from filing for bankruptcy.

One reason that bankruptcy still carries such a stigma is because some people assume that when a person files for bankruptcy it is just because they didn’t keep a sharp eye on their finances or that they spent more money than they had any business spending. The majority of bankruptcy lawyers will tell you that these are not usually the precipitating factors that lead to personal bankruptcies. It is almost always unforeseen negative events in the lives of people that lead to them ultimately making the very difficult choice to file for bankruptcy to get some protection from creditors/collectors and to get a fresh start on their finances.

When people hear about someone filing for bankruptcy, or even bankruptcy laws, they often fail to comprehend what it is all about. Filers get a fresh start, they get a chance to rebuild their credit scores, they get freedom from collection agencies and they often get a chance to breathe easier and to improve their personal/professional relationships too. These laws were created for these purposes. Everyone deserves a second chance, and though it is not anyone’s first choice, filing for bankruptcy is often the only recourse that they have.

Bankruptcy Filings are going down

Data provided by the Administrative Office of the U.S. Courts stated that there were 844,495 U.S. bankruptcy filings in 2015. That takes the number down from 936,795 that were filed during the previous year, and represents a nearly 10 percent drop. Despite the fact that bankruptcy filings are on the decline across the nation and in individual states, many bankruptcy lawyers are still seeing enough clients to keep their rosters full most of the time. There are always folks who go through difficult times and who very much need the kind of protection and fresh financial start that can only be realized through a bankruptcy filing.

Immediately following the recession that started in 2008, bankruptcy numbers were skyrocketing for a few years. As the economy began to stabilize a bit, though, the numbers leveled off a bit. And now, it looks like we may finally be entering a stretch of time where the number of bankruptcy filings continues to decline for the foreseeable future.

People should remember that even though there will always be a small fraction of the population who will use whatever means they can to avoid paying their debts – even if that means filing for bankruptcy – that the majority of people are honest, responsible and would likely do whatever they could to avoid filing. However, life doesn’t always work out the way that we would like it to, and sometimes people have no choice but to try to remedy the difficult hand they have been dealt by making use of the bankruptcy laws that were established for this purpose. The bottom line is that if you are in a situation where you have to file for bankruptcy, don’t think of it as the worst day of your financial life. Instead, consider it a second chance; a time to recover and to rebuild your personal finances for a brighter future.



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