Most people would not view bankruptcy as an estate-planning tool; however, there are situations when bankruptcy law can be helpful in preservation of a portion of your estate assets and enabling you to start afresh.
There are several forms of bankruptcy: Chapter 7, Chapter 11, Chapter 12 and Chapter 13. The type of bankruptcy you need to file depends on your personal circumstances.
Bankruptcy laws were put into place to help people struggling financially to remedy their financial difficulties. It is undeniable there is a stigma attached to bankruptcy; however, financial problems can arise through no fault of the person, such as loss of employment or a medical crisis.
Filing for bankruptcy is not advisable unless your financial circumstances truly warrant seeking protection in this way. At the same time, if you are in such a predicament, you should not avoid the process due to feelings of embarrassment or shame.
Bankruptcy law enables you to keep many of your assets, which will help you regain financial security. You may be able to retain your home and retirement accounts, as well as other types of assets. In some cases, you can also keep your interest in a company. The important thing is to take action before you are faced with judgments and garnishments.
Of course, bankruptcy should not be considered an estate-planning tool unless it is unavoidable, but, keep in mind, that if you do need it, this law is available to offer you some protection. Bankruptcy is no longer solely considered a sign of personal failure; it is now utilized as a financial tool for both businesses and personal estate planning.