“The right time to go bankrupt is when you’re financially, stuck but still have assets to protect,” Newsweek financial columnist Jane Bryant Quinn tells her readers. “If you are reaching the end of your rope, don’t try to hold on. Save what you can.”
Saying she normally would tell readers to “suck it up, cut spending and repay your consumer debt,” this year she is risking her “good-girl reputation with a subversive idea: go bankrupt in 2009”. It is not always possible to pay debt “especially with an economic tsunami rolling over your home, job and health insurance.”
She quotes Iowa Law Prof. Katie Porter author of Going Broke the Hard Way: The Economics of Rural Failure, and The Failure of Bankruptcy’s Fresh Start, who says “most families, honorable to the end, struggle longer than they should.”
The point of bankruptcy is to give yourself a second chance, Quinn says. Save your home if it makes sense to do so or walk away if the house is underwater. She discourages spending retirement accounts to pay debt.
If you are unemployed, don’t file bankruptcy “until you have a new job and can see what’s ahead of you,” Quinn writes quoting Harvard Law Prof. Elizabeth Warren, author of “The Vanishing Middle Class” in Ending Poverty in America: How to Restore the American Dream 38 (The New Press, 2007), who advises you can file chapter 7 bankruptcy once every eight years.
A fresh start is “what a new year out to bring”, Quinn says.
About Jill Michaux
