A key challenge that many people must overcome in deciding to file for bankruptcy is simply admitting the need for it. When you’re struggling to pay your bills, it’s easy to get down psychologically. This is a problem for many people in the San Antonio area and across the country.
But before you beat yourself emotionally anymore, consider that the ranks of those who have declared bankruptcy include many very successful people. For example, Dave Ramsey, the enormously popular self-help seminar leader, once filed for personal bankruptcy himself.
Another example is the recent Chapter 7 bankruptcy filing by a tech entrepreneur who sold his company to Google only five years ago for $1.8 billion. Last month, he filed for bankruptcy protection after a series of deals in real estate and other areas went badly wrong.
Chapter 7 is often thought of as a “clear the slate” or liquidation bankruptcy. And it’s true that, compared to a Chapter 13 bankruptcy, a Chapter 7 bankruptcy aims to discharge more types of debt in exchange for giving up more property claims.
This does not mean, however, that someone has to give up everything in order to seek debt discharge under Chapter 7. That is what bankruptcy exemptions are for.
Of course, there can be differences in practice between a Chapter 7 bankruptcy filed by an individual and a Chapter 7 filed by a business or partnership. But our key point in this post is that a bankruptcy filing is not an admission of permanent defeat. When used effectively, it can be more like a strategic retreat that provides a fresh start and a chance at renewed success.
Source: Bloomberg Businessweek, “How Halsey Minor Blew Tech Fortune on Way to Bankruptcy,” Dawn McCarty and Ari Levy, May 31, 2013