As Philadelphia bankruptcy attorneys we have to educate people past the stigma of bankruptcy every single day. People have been trained to believe there is no greater shame than turning to the courts to get debts discharged and dealt with.
But this is a lie, largely perpetuated by creditors who would rather pursue every American for every last penny they owe. In truth, bankruptcy is one of the key mechanisms keeping our entire economy afloat.
Without bankruptcy, unemployment would be a much larger problem.
NPR once called Bankruptcy “The Secret Weapon of the American Economy.” This report told the story of a Charlotte, NC appliance store which would no longer exist had Chapter 11 not been an option.
This means jobs get preserved which might otherwise evaporate. Far more people are helped by bankruptcy than are harmed by it. This is one reason why some countries are giving real consideration to adopting bankruptcy laws just like ours. The EU has been losing 1.7 million jobs thanks to the 200,000 businesses which close their doors on an annual basis, businesses Chapter 11 could have saved.
Entrepreneurship would be too risky for most if bankruptcy were no longer available.
Nothing drives economic growth like entrepreneurship. There’s no replacing it.
“Lenient, entrepreneur-friendly bankruptcy laws” mean more people willing to start more businesses. This means more products, better prices, and of course, more jobs.
Entrepreneurship can be an exercise in failing over and over again. Many household names in the business world went bankrupt multiple times before hitting on the product, service, or business model that worked. If bankruptcy had not been available to these people many of the companies we all do business with every single day simply would not exist.
Without bankruptcy, pursuing home ownership would be too risky for most families.
Think about it. Most people take out 30-year mortgages. That’s a 30 year gamble that you’re never going to lose your job or run into any other form of financial trouble.
Bankruptcy is one of the tools that can protect your investment if you run into trouble. Without it, you might end up pouring years of your life and finances into your home, only to lose everything in one bad year. At that point, it would only make sense to buy a home if you could do so for cash, an option that just isn’t available for most.
Bankruptcy isn’t the only foreclosure defense strategy, but it is an important tool in our toolbox.
You are not entirely in control of your financial future (and neither is anyone else).
You don’t control the unemployment rate, or whether your job will exist in five years. If you’re a business owner you don’t control whether some innovation will come along and disrupt the entire marketplace. You don’t control disasters, accidents, or illnesses.
You can do everything right and still end up in over your head financially. In fact, plenty of people save constantly, only to find they still can’t get ahead.
It’s a good thing our economy comes with its very own “pressure release valve” when staying ahead becomes impossible. Otherwise we’d all be in a lot more trouble.
If you need to file bankruptcy, don’t be ashamed to do it. Don’t hesitate, and don’t wait longer than you have to. The system exists for a reason. It helps everyone. Plenty of successful people and companies use it. If you need it? You should too.