A concern we hear often is that debtors feel that if they file bankruptcy, there will be negative implications on the economy. It’s great to be socially responsible and have concern regarding your decision to file. What most debtors don’t realize is that in most cases, the decision to file bankruptcy is actually beneficial for the economy.
The basis of our economic system stems from the ability to buy goods and services.
If your funds are tied up paying creditors and high interest rates, you are unable to buy additional goods and services to help stimulate the economy. By having debts discharged or significantly reduced, that frees up money to put back into the economy which is actually more favorable that paying a few creditors with high interest rates.
The inability to have debts forgiven does not increase a debtor’s likelihood to pay their debts; however the ability to discharge debts ultimately allows for more money to circulate and fuel the economy. Additionally most creditors realize that a percentage of the money they lend will not be repaid, and that is accounted for in their high interest rates.
Filing individual bankruptcy is only detrimental to the economy when it happens in mass, which typically stems from a recession and/or depression. While this has happened in recent history, our economy has seen an uptick in the last few years.
If your decision to file bankruptcy has been halted because you are concerned that it will have an overall negative impact on the economy, you can rest easy. Bottom line – if you are drowning in debt and want to help the economy, it may be most beneficial all around if you actually file for bankruptcy.
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