It is not unheard of for people to make their decisions based on how something will affect the economy, whether this means investing here or buying there, we are in a circle of life economy, and bankruptcy is indeed a part of that. A surprisingly enough, bankruptcy does in fact help the economy, because it is a means of not only helping those in debt, but it gives those once debtors the chance to yet again borrow money to spend. As consumers we rely on credit for a lot of things, whether this is buying a new car or home, or establishing our mortgage loans, etc. even if we use cash on a lot of things, even having credit is needed for certain things we do.
Business bankruptcy, having in mind its benefit to the economy, allows companies to go above and beyond with their research and take extra daring steps in expanding their company and making new breakthroughs. If something doesn’t work they file for bankruptcy and keep pressing forward, while it may slow down the process, it encourages the companies to keep going. In return, by people filing for bankruptcy, it helps creditors receive back whatever they can from the debts owed to them as well as taking over property possession.
The only time that corporate bankruptcy is not a good thing is when it happens in large quantities, and multiple companies are falling under. This is usually a sign of a larger economic downward spiral, and because of multiple companies going under, it can true into a recession or depression. When companies struggle, it then turns into the people struggling and therefore nationwide scarcity in spending and people will start saving more rather than spend. The difference between corporate bankruptcy and personal bankruptcy is that there is the chance that many more people will be affected poorly due to the cut in jobs or wages, etc.
The government passed the Bankruptcy Abuse Prevention and Consumer Protection Act in 2005 and this made it harder for people to file for a Chapter 7, one that is going to “wipe away” debt and therefore encouraging debtors to file for a Chapter 13 which still holds them responsible for debt but gives them a much more manageable way to pay it off. Many believe that this was not helpful for those who were in debt and still were unable to make payments. If you are at all concerned with filing bankruptcy, and feel as though you are buried in debt and there is no way out, contact Malaise Law Firm today. We have years of experience helping client work through their financial struggles and we want to help you determine the best route for you. Call us for more information!