When Evaluating Bankruptcy As A Debt Relief Option, Free Yourself From Ego And Evaluate Your Finances Like A Board Of Directors
Regardless of whether it can help, most people who find themselves deep in debt shudder at the thought of bankruptcy. Around the dinner table, filing bankruptcy carries a certain stigma, it’s not something you want to bring up with friends or family. Admitting you’ve filed, or are contemplating filing for bankruptcy pierces the shiny image you portray to the world. It can be an ego destroyer. After all, you’re a success, and bankruptcy is for losers.
Or is it?
Before you make up your mind, leave the dining room and consider the attitude towards bankruptcy that exists in the board room. Of course, successful companies are never thrilled to file for bankruptcy, in most cases they try to avoid it, but they don’t necessarily consider it a failure as much as they do an opportunity to start over. Far from a lasting defeat, bankruptcy is considered a shrewd and sophisticated move.
Consider Donald Trump. The outspoken, celebrity real estate mogul is estimated by Forbes to be worth 2.7 billion dollars, yet he’s filed for bankruptcy four times. Yes, he’s filed bankruptcy four times. Now to be clear, Trump has never filed for personal bankruptcy, he’s taken four of his companies into bankruptcy to protect them from creditors and restructure contractual terms. But for our purposes, the distinction isn’t meaningful. By filing bankruptcy Trump put his name in the headlines in an unflattering light. His personal brand temporarily suffered, but he understood that he would emerge stronger as a result of the substantial protections of the bankruptcy code. He looked at the big picture rather than the 24 hour news cycle.
To quote Trump:
“Basically I’ve used the laws of the country to my advantage and to other people’s advantage just as Leon Black has, Carl Icahn, Henry Kravis has, just as many, many others on top of the business world have.”
And that summarizes the board room attitude towards bankruptcy. It’s not “oh my God, my girlfriend will think I’m a loser,” it’s “once I shed my unsecured debt with no tax liability, I’ll have a real shot at a strong recovery.”
Rest assured, your creditors will use any and all means at their disposal to collect on what you owe. Refusing to explore all of your options due to personal pride is akin to going through life with one hand tied behind your back.
Not a good strategy.
See also: Is bankruptcy bad? Can it be good?