Chapter 7 Bankruptcy – Where is the Catch?
Bankruptcy is too good to be true
People naturally have a suspicion about bankruptcy. It brings up many questions. You can get rid of your credit card debts? Almost any amount? Even if you used the money for cash advances, luxury purchases, or travel? And I get a fresh start, free of debt?
Yes, in many ways, filing for bankruptcy seems like some sort of trick. But the fact is, this is completely real, and is a public right created by congress. Like everything, there are exceptions. For the most part the exceptions are there to screen out people who abuse the system. But for the person that legitimately gets in overbearing debt because of circumstances out of their control or a period of bad spending habits, the exceptions do not tend to apply.
Why Does Bankruptcy Exist?
People who fall into debt get trapped in an endless cycle. Their credit cards all get cut off by unpaid creditors. Bad credit prevents the purchase of homes, cars, consumer goods, restaurant meals, travel, etc. It has been suggested that chronic debt leads to job related stress, divorce, and even unemployment. The end result: a debt ridden person steps outside of the US economy. They stop buying products and services. They also can become a burden on taxpayers by drawing unemployment or by seeking other public benefits. Divorce, collections lawsuits, and displaced families become an expense on the court system and society as a whole.
A bankruptcy filing gives someone a fresh start. Immediately after a bankruptcy, people purchase more goods and services. The stress that can lead to divorce and interruption of families is gone. Credit ratings slowly rise, credit becomes available, and that person is able to stimulate the economy by becoming a consumer once again. Bankruptcy is not a free giveaway – it helps the person and it helps society.
People that Have Filed for Bankruptcy
A very partial list:
- Abraham Lincoln – 16th President of the United States
- Bjorn Borg – Pro tennis player
- Gary Burghoff – Radar O’Reilly in MASH
- John DeLorean – Automobile designer and entrepreneur
- Dorothy Hamill – Olympic gold-medal ice-skater (1996)
- La Toya Jackson – rock star (1995)
- Jerry Lee Lewis – famous Rock n’ Roll star
- Mike Tyson boxer (2003)
- Donald Trump billionaire entrepreneur