In many cases, the minute people decide they need to see a bankruptcy attorney, feelings of disgust, hopelessness and embarrassment come to mind; they think they've hit rock bottom. However, bankruptcy often brings hope, not regret. It can be the beginning of a new life for so many individuals and small business owners in this country.
Many people who have filed for Chapter 13 bankruptcy or Chapter 7 bankruptcy will admit that they felt relief because they were no longer weighed down by an enormous debt load. But filing for bankruptcy protection doesn't only provide emotional relief for debtors. Debtors can take away tools and information to help them make future financial decisions.
In 2005, Congress passed the Bankruptcy Abuse Prevention and Consumer Protection Act, requiring mandatory financial and education counseling to individuals who file for bankruptcy. Debtors who file bankruptcy attend educational sessions that show them how to save money each month, cut down on unnecessary expenses, set financial goals, and manage bills.
According to a study conducted by the University of Illinois and Money Management International (MMI) that surveyed 4,000 bankruptcy filers in various stages of the bankruptcy process, the counseling requirements appear to be helping debtors.
Angela Lyons, the University of Illinois economist who administered the study, says that the counseling offers "viable mechanisms" in helping debtors understand and improve their financial behaviors. She claims the study revealed that the counseling improved debtors' ability to make financial decisions not only in the short-term, but also in the long-term.
Ivan Hand, president and CEO of MMI, stated, "As a bankruptcy counseling and education provider, we believe it is our responsibility to ensure that our programs are successful in empowering individuals and families to build future financial security."
Many small business owners who contemplate filing for business bankruptcy feel the same as consumers drowning in debt - embarrassment, hopelessness. Many even see a bleak future. However, according to a report released by the U.S. Small Business Administration that used data from the National Survey of Small Business Finances, small business owners actually are more profitable post-bankruptcy. It's true that many face loans with high interest rates, but the study shows that new or reorganized businesses can and do perform financially better than competitive businesses who have never filed for bankruptcy protection.
If you are overburdened with enormous debt, speak with an experienced bankruptcy attorney. Your bankruptcy lawyer can advise you of both the direct and indirect benefits to filing for personal or business bankruptcy and how it truly can offer a "fresh start."