While America has taken quite a beating in this economy, the bankruptcy system has done its job to keep things more stable than not. What most Americans don’t realize is that Americas’ bankruptcy system is unique and generous to debtors while much of the world lacks a bankruptcy system or if they do have a bankruptcy system, it is inadequate in giving the debtor the type of debt relief that would truly give them a second chance. What exactly makes the U.S. bankruptcy system so unique?
- It gives debtors a “no strings attached second chance financially. In Chapter 7 bankruptcy a debtor, whether they are an individual or a corporation can discharge all of their debts with no further obligation to their creditors. With this fresh start, they can immediately rebuild their credit and save for the future. Many countries, such as India, have no system that will adequately forgive a person’s debt, leading some who are overwhelmed with debt to even consider suicide. A sad state of affairs indeed.
- Corporations who file bankruptcy are given a chance to discharge most of their debt and continue doing business using Chapter 11 bankruptcy. This system is very unique because even countries such as Britain don’t have a bankruptcy system like that. It is because of Chapter 11 bankruptcy, its codes and protections that large companies such as Chrysler and United Airlines are able to go bankrupt and continue doing business. Bankruptcy not only saves the company, it saves the jobs and financial stability of millions of Americans.
- Bankruptcy is not judgmental. It doesn’t matter if the debtor is foolish or prudent, the American bankruptcy system does not judge. In bankruptcy even the foolish are able to get discharge of their debts. This removes the element of blame and shame that many bankruptcy systems have in other parts of the world.