Understanding bankruptcy requires a mix of financial and legal knowledge. Yet it is easy to overcomplicate things and get lost in strange-sounding terms.
The Merriam-Webster dictionary gives a kid’s definition of bankruptcy that everyone can understand: “The state of not having enough money to pay debts.” If that is your reality, you may need to consider filing for legal bankruptcy.
Are there alternatives?
Financial institutions may offer you another loan or credit card. Yet if you do not have enough money to pay your current debts, how will that help? What needs to happen to make paying your existing debts possible?
Do you need the boss who hates you to double your salary? Or your Aunty Angela, whom you have not spoken to in years, to die and surprise everyone by leaving you everything?
Why is thinking like a child useful?
Little kids tell it like it is, without worrying about what others might think. However, as adults, we often worry too much about other people’s opinions. What will the neighbors say if they find out I’m bankrupt? Will the person I’m dating end the relationship?
We can also overcomplicate things. Tell a kid to calculate your income minus your expenses minus your debt, and they will tell you it does not add up. You, on the other hand, may look for complex permutations to try and make it work. If this happens, and this happens, then $4,000 in minus $3,500 out minus $1,500 repayments really can make zero.
Bankruptcy is not child’s play, but with the correct guidance, it can be more straightforward than you think. The hardest part of bankruptcy is deciding to do it.