While you may not feel like the bankruptcy you're considering is good for your finances, there are times when bankruptcies can be good for you. Bankruptcies were at a high in 2008 because of the recession, and of course, there was some judgment over those who couldn't afford to pay for their homes or other bills.
The fact is, if you can't afford to pay for your home or the bills you have, bankruptcy is a viable option that shouldn't be looked down upon. Facing the fact that your finances are out of control early gives you the chance to start over again without debt accumulating further.
In 2008, bankruptcy filings jumped up a shocking 32 percent from the year before. By June 2013, around 1.1 million filings hit the U.S. courts. So is bankruptcy starting to fall out of fashion, or is it still a tried-and-true method?
Some people may balk at the thought of it, but there are some benefits. For one thing, if you file for bankruptcy, creditors can't seek lawsuits against you or win the right to garnish your wages. It's important that your creditors know you really can't pay, and that's the purpose of bankruptcy.
One of the most common kinds of bankruptcy is called Chapter 7 bankruptcy, best known as liquidation bankruptcy. It allows you to liquefy nonexempt property. That process means that you can sell that property to pay back debts, and then, once that's done, any remaining debts can typically be discharged. Some kinds can't be, like taxes or student loans.
Source: CNBC, "The Good Thing About Bankruptcy," Sakina Spruell, accessed March 25, 2016