Is Bankruptcy Filing Good for the Economy?


Over the last four years the United States has seen a large number of Americans filing for bankruptcy to eliminate their debt. Most of these individuals had no other choice and were at the end of their rope. In the past, bankruptcy carried a stigma of failure and dishonesty. Until the recent downturn in the economy, where millions of Americans got caught with their pants down, did the topic of bankruptcy filing finally lose its bad name. Creditors would like Americans to believe that bankruptcy is bad for the economy. On the other side of the coin we have consumers that are starting to catch on that capitalism would work without the ability to file bankruptcy and get away from bad debt.

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To be honest nobody really wants to file bankruptcy, unless of course you are some kind of masochist that enjoys piling stress on themselves. The truth of the matter is, most people wait too long to file. Initially, it's common to see people kicking the can down the road as far as they can before they can't afford to pay the bills at all and the creditors become aggressive. Recently, because of the quantitative easing the Fed started back in September with QE3 and more recently QE4 banks are once again lending without any rhyme or reason to people that can afford to pay these debts back. In 2012, the number of Americans filing for bankruptcy declined to 1.3 million and the media responded with praise to what the Fed was doing and how the economy was now recovering. What has actually happened is most Americans now have the ability to borrow more money to pay off debts of the past. This snowball has officially been pushed off the hill and is now getting larger and gaining speed heading directly for our economy and economic well-being. Some economists have gone as far to say that it is now a race to the bottom for these big banks.

But in today's economy, bankruptcy filing is absolutely necessary for businesses, consumers and governments alike. Capitalism wouldn't survive without the ability for someone to file bankruptcy and eliminate their financial mistakes of the past. All you have to do is read the business section of the newspaper and see how many businesses are filing bankruptcy to restructure their debt. More recently, there have been many municipalities that have used bankruptcy filing to force unions into coming to the table to restructure employee pay and benefit contracts. For the consumer it is mostly used as a last resort and sometimes to the demise of the consumer. In today's economy individuals should not believe what they hear on the mainstream news, but listen to their gut and make their decision to file bankruptcy based on facts, not on hype.

Creditors continue to demean individuals that are having financial troubles. These individuals need to know that they shouldn't feel guilty about their situation and should talk to a bankruptcy attorney about filing. Why keep paying on debt that will never be paid off outside of winning the lottery. Filing bankruptcy allows an individual to get a second chance at rebuilding their financial future and becoming debt free.


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