Bankruptcy. It is a word that often triggers thoughts of failure. But should it? There is a strong argument that this is the wrong way to look at bankruptcy. Instead of seeing it is a failure, it is important to see bankruptcy as an opportunity.
How could bankruptcy be an opportunity?
The United States is structured as a capitalist society. Sometimes business endeavors work, and sometimes they do not. Our founding fathers believed in supporting these risk takers. In encouraging entrepreneurs to try out that idea.
As a result, Congress put together bankruptcy laws. These laws can, in certain situations, provide these risk takers who make a bad bet with a fresh financial start. This works for both businesses and individuals. Consumers generally use bankruptcy to help reset after hardships like medical bills or credit card debt while businesses use it as a financial tool.
Regardless of whether used by a consumer or a business, two reasons those who file for relief through bankruptcy should see it as an opportunity include:
- Effective. Many other countries have adopted a bankruptcy system that is similar to the one we use here in the United States. This is because this system, the ability to forgive a mistake, allows for businesses to take risks. These risks can translate to innovation that help keep our country competitive.
- Fresh start. Those who file successfully for relief through bankruptcy can get certain debts discharged by court. This means that they are essentially forgiven, and the filer can move forward without creditors reaching out demanding payment. It basically wipes the slate clean.
These two opportunities can help businesses and consumers remove the social stigma that comes with bankruptcy.
What if I am considering bankruptcy?
Those who are considering bankruptcy are wise to note that there are different types. The right type depends on whether the process is for a business or consumer and the facts of the situation. An attorney can review the situation and provide guidance.