I have always viewed bankruptcy as a disinterested party. It is true that bankruptcies have reached all-time highs. There are always huge companies filing for bankruptcy protection (Enron; most of the airlines; most of the suppliers to GM and Ford). Over the past year, a series of circumstances have really opened my eyes to how awful bankruptcy is for all parties involved.

For the creditors owed, they will not receive the money due them! This is HORRIBLE! They extended REAL MONEY to the individual(s) or company with the clear understanding (contract) that the money would be returned. They are now without the money AND now have little to no chance of recovering ANY of the money. What does this do to the company? For many companies and individuals, it could put them in serious financial conditions. In either case, the money needs to be made up elsewhere. Who makes it up? Those buying the products – the prices are increased to cover the losses.

For the individuals declaring bankruptcy, they KNOW that they are sticking their creditors with the debt. It is not something that they are disinterested in. They feel HORRIBLE about it! It impacts their family. It impacts their marriage. It impacts their relationships with their children. Worst of all – many individuals experience a LOSS OF HOPE! Hope is what sets the human spirit on fire! The individuals and companies can also lose the ability to conduct business with preferred providers as they are now blocked out via contracts, extremely high interest rates, or a unwillingness to conduct business with them period.

The sad thing is that most bankruptcies are preventable!!! It does require self-discipline! It does require spending less than is earned! It does mean that the word “NO!” enters our vocabulary.

If you are in desparate financial shape, go see a certified financial planner BEFORE visiting a bankruptcy attorney. You KNOW what the attorney’s recommendation will be.

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