In Debt? Consider Bankruptcy. Seriously

f you want to see someone instantly disagree with you, tell them that people that file bankruptcy do better financially than people who don’t and struggle.

Audio Length: 00:06:18

The Two Sides of Money Troubles

When people face unexpected money troubles, it is just math wrapped in emotion. The underlying facts are not judgmental. And the math doesn’t make assumptions or believe common myths.

Difficult financial situations challenge our very core of self-worth and beliefs. Those same debt obstacles can leave us with Financial PTSD, depressed, anxious, and fragile in so many ways.

Trying to make complicated and tough choices at our lowest moments on how to best deal with personal finance troubles are darn near impossible. When you are involved in a debt hole, you just can’t think clearly.

So let’s take the emotions out of the equation for a moment and look at the facts.

Honest Talk About Bankruptcy

Of all the possible factors involved in best dealing with money troubles, the one component that is the most precious is time. Time acts as a tool to drag your problems out and reduce your future financial worth.

By not taking action to deal with debt problems, we waste time and lose the ability to do even better financially in the future.

The majority of bankruptcy filings are Chapter 7 bankruptcy. By filing a Chapter 7 bankruptcy, consumers obtain immediate relief from all collection efforts, including lawsuits, wage garnishments, and direct communications from creditors. Debts are legally eliminated tax-free in about 100 days. It costs about $2,000 or less in legal fees to achieve that result.

Other people delay in taking action to address their situation and let time pass. Doing that just drags out the financial pain and holds them back from getting a fresh financial start.

The Federal Reserve stated, “The individuals who go bankrupt experience a sharp boost in their credit score after bankruptcy, whereas the recovery in credit score is much lower for individuals who do not go bankrupt.”

The Federal Reserve research also found, “insolvent individuals who do not go bankrupt exhibit more financial stress than those who do.”