Such a discussion should start with a clear position statement.  I HATE the idea of someone going through a bankruptcy.  A friend recently shared that he views a bankruptcy like a divorce.  Of course the irony is that too many people do view it exactly like a divorce – a simple ‘do over’, rather than a scar on their financial soul.

I have a family member who years ago underwent a bankruptcy as if hitting the reset on a video game.  It disgusted me then as it does now.  Nor would it surprise me if it was not their only such experience.

I believe that bankruptcy should never be a decision we make so much as a place we pulled into kicking and screaming all the way.

Bankruptcy should be viewed as the nuclear solution, not simply a trap door at the bottom of the stage from which we escape.  It is something we should fight and protest and fear and detest.

But… if you’re going to do it, at least get it freak’n right.

I nearly fell off my exercise machine when I heard a guest on a recent Dave Ramsey show.  This moron – I can think of no better term – recently completed a bankruptcy but was still having trouble paying his bills.  Hmm, ok, part of his struggle was clearly his $35k annual income given he also had a wife and kids but that was not the problem.  The problem was that he reaffirmed debt for their 2 cars as part of the bankruptcy proceedings – the total car related debt was also, ironically, $35k.

Are you kidding me?!?

If you’re going to go through all the trouble and embarrassment and self impose such a long term career limitation, why reaffirm anything much less your stupidest purchases and most upside down debt?

Bankruptcies are the nuclear solutions.  They should deliver a scorched-earth result.  Debt is the devil that led you to this place so reaffirm nothing.  Let the banks have it all in exchange for a clean, clear, cash based slate.

If – and I think you should never do so willingly – you’re going to go through a bankruptcy then get the most out of it.  Turn your financial life into a clean white sheet of paper onto which you begin to scrawl a cheap apartment rental and garage sale cars.

If you’re not willing to reduce yourself to such a diminished existence then you’re not really a candidate for bankruptcy.  Even as a bankruptcy clears your load it should still serve as a punishment for past misdeeds and poor behaviors.  That’s not to say that you cannot regroup and pick yourself up, but you should at least be picking yourself up from the floor.  A task made only easier by entering and executing the bankruptcy correctly.

Photo By: Shirley Two Feathers

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