Someday we may live in a world with few financial risks. But today, in order to succeed, to grow, or just to experience life, you’ve got to take risks. You drive to work, knowing that it’s actually quite dangerous on the road. You get married and start a family, knowing that half of all marriages end up in divorce. And you roll up your sleeves and start up that business, knowing that statistically it may have a pretty good chance of failing the first time. But you do it anyway. No, we don’t want to fail. But we do want to have the chance to fail. Why? Because that also gives us a chance to succeed. We need to take risks in life, because that’s where some of life’s greatest rewards lie. That’s where bankruptcy comes in the picture: it provides the safety net, that makes it realistic to walk the tight-rope of life.
Bankruptcies were built to give honest and financially distressed families a fresh start. Can the system be abused? Of course it can, and unfortunately sometimes it is. However, safeguards are built into the Federal Bankruptcy Code and usually into the ethics and standards of the law firms who help provide the benefits of the fresh start, without the abuses. For example, if a family can demonstrate that they really can afford to pay back most or all of their debts, then they really ought to do this. In fact, the Bankruptcy Code requires this in a chapter 13. As another example, while making plans to file bankruptcy, one may not transfer valuable assets to family or associates. There are many other safeguards as well. But I have found that most people truly do want to do the right thing, and if given an opportunity to do so, they will.
Nearly all advanced Western economies have such a “safety net” in society, allowing folks to start families, to start business, and to take chances with their imperfect abilities but with perfect dreams. Knowing that there’s a way for people to keep their only vehicle, their clothing, some equity in their home, even if things just don’t go right, allows and encourages appropriate risk-taking that makes us all successful in the end.