Regardless of how many people have gone through it — including many famous and wealthy people — the idea of filing for bankruptcy still leaves a lot of people cold. Even if it might lead to a brighter and better financial life on the other side, some people can’t get past the notion that they are somehow failing by filing for bankruptcy. This simply isn’t the case.
Some experts in debt management tell people that they should not be thinking like consumers but more like corporations. After all, many businesses have filed for bankruptcy without losing any sleep at night — and have ended up much better for having done so.
There are many options and variables that need to be examined when considering a personal bankruptcy filing. For many people, one of their largest sources of liabilities is their credit card debt. Some people feel obligated to pay that entire amount back, regardless of how long it might take.
However, this is not necessarily the wisest tack to take. Much is dependent on what other investments might earn over time — for example, if it takes 10 years to pay off a large credit card debt amount, that could represent 10 years of not contributing to a workplace retirement account. And with employer matching funds and the potential for tax-free gains, people could be doing themselves a financial disservice by concentrating on debt instead of investing for retirement.
This is not a decision that must be made without any help, however. Bankruptcy attorneys can help people in debt make informed decisions about their choices.
Source: The Huffington Post, “I Want to File Bankruptcy,” Steve Rhode, May 25, 2013