We often talk about the direct effects of bankruptcy; but there are many indirect positive impacts that bankruptcy can have on a debtor’s life.
Let’s explore a few:
- Because bankruptcy debtors are able to reduce or even completely eliminate the debt they owe creditors, their future income is freed up to be used on themselves and their children. For example, a debtor whose debts have been discharged or reduced in bankruptcy may decide to save for their child’s college education or even decide to send them to a private elementary or high school. This might not have been possible if they were prevented from filing bankruptcy.
- Saving for retirement is another possible indirect benefit of bankruptcy. Once again, because future income will not be redirected to creditors for the payment of old debs, the debtor can invest in their golden years if they’re not able to work or not want to work after they reach the age of 62. Retirement is an important aspect of our society and bankruptcy helps many debtors realize that dream.
- Paying for medical insurance, life insurance and other life emergencies. One of the things about life is that it is full of surprises. Some of those surprises are pleasant while others are unpleasant and may even force us to seek the protection of bankruptcy. Fortunately, bankruptcy gives debtors the opportunity to save money and pay for insurance that will help them face life’s emergencies with more ease.
- Attaining the dream of homeownership. While many bankruptcy critics claim that those who file bankruptcy can never purchase a home, nothing could be further from the truth. The truth is that it is bankruptcy that allows many debtors to finally save and put a down payment on a home only a few years after receiving a bankruptcy discharge.