Is Bankruptcy Only for the Poor?

The concept of bankruptcy although it is backed by law, the constitution, and regulated by Congress, is fertile ground for debates. One of the debates is in relation to whom these laws benefit most. While some may answer that it benefits the poor, other groups will say that it benefits large corporations, as it helps them prioritize and restructure debt while staying in business. It also helps them deal with taxes. The middle class, as always, seems to be in the middle of it all. As the middle class has some assets, that the poor do not - therefore can be liquidated into Chapter 7, if enough insolvency is proven. Otherwise, the middle class has to claim chapter 13, and go through a repayment plan of the debt for five years. For many, five years is not enough, as it seems that the middle class is the class that will accumulate much unsecured debt. The poor, many times, do not carry much debt compared to the middle class. The poor will be so financially insolvent that there might be no need for claiming bankruptcy. Therefore, the question remains, "is bankruptcy for the poor?" It seems that bankruptcy benefits more the middle class and the large corporations, as well as farming/fishing families, and municipal debt. However, if the poor would have enough money to pay the fees related to filing bankruptcy, it would benefit them as well; since Chapter 7 is designed for the insolvent - however, the poor might not have enough assets to liquidate anything.

Bankruptcy, although it ruins someone's credit, it gives a fresh start once the debt has been discharged or restructured and repaid. Therefore, the question may better be rephrased to - "Who needs a fresh start?" The answer applies to all classes - the poor, the middle class, and the wealthy. Everyone deserves a second chance at learning to manage credit and finances, and bankruptcy provides this second chance for many individuals and businesses that have learned their financial lesson. Unfortunately, some individuals and businesses may not learn it, despite credit counseling, and will continue to commit the same financial mistakes that landed them into bankruptcy. For these individuals or entities, there may not be a healthy financial horizon in the future.

The six types of bankruptcy Chapter 7, Chapter 9, Chapter 11, Chapter 13, Chapter 12, and Chapter 15 are designed to help individuals and business who fall into certain categories. Any person may be into deep financial waters at some point, whether it being by financial irresponsibility or just by hardship and financial loss. Life events such as divorce, death of a provider, unemployment, illness, and many other hardship conditions may land a person with an excellent credit history at the doors of bankruptcy. As the adage says, "bad things can happen to good people."

The important issue is what an individual or businesses do after going through bankruptcy and after getting a fresh start financially. The answer to that question will determine the financial success in the future of the individual or business entity. In many ways, the bankruptcy process is not the end, but just the start to a better managed financial life. For more information on this topic visit restartcentral.com.