The recession has battered America’s wealth. According to Federal Reserve, America’s collective wealth is now $53.5 trillion compared to our pre-recession wealth of $65.8 trillion. What does that loss of wealth look like for you? Devalued homes, assets lost to creditors, retirement accounts obliterated by Wall Street greed and failures? Bankruptcy, mostly known for its ability to discharge debts, also has the added effect of helping the average American to regain their wealth.
Let’s take a look at some of the ways that bankruptcy might help you regain lost wealth:
- Because bankruptcy discharges most unsecured debts and will allow you to return assets such as a home or car releasing you from any obligation to pay the note, it frees up future income. Without bankruptcy, your future income would be devoured by debt payments. But because you will not have to make certain debt payments you can invest that money into wealth producing assets such as a retirement account or even a new home that is valued fairly.
- Bankruptcy protects the debtor’s existing assets such as a retirement account, helping the debtor accumulate value that will build wealth for their future. Without bankruptcy, many debtors drain their retirement accounts trying to pay bills. But because bankruptcy forgives many debts and protects the retirement account from seizure by creditors, the debtor’s future wealth potential is protected.
- Finally, bankruptcy gives the debtor a second chance to regain wealth losses by freeing them from repayment demands of creditors. How many businesses would go unopened if it was not for the power of bankruptcy? Bankruptcy gives the debtor a second chance to go build that business or even to explore a new innovative career without the worry of how they will pay old debts.