There is no doubt the impact of the coronavirus crisis is going to cause a large number of people to experience a financial death.
But here is what might just hit home for many, especially those who fall for those who constantly say bankruptcy is wrong or the last resort. This is the sole reason I really disagree with Dave Ramsey. His “fake news” or mistruths about bankruptcy have harmed more people than help. But I digress.
President Trump said, “bars, restaurants, food courts, gyms and other venues where groups of people congregate should also be closed in states with evidence of community transmission.”
The financial shock many will feel as a result of missing work, unexpected medical bills, or lost income is going to lead a number of individuals and families into a situation where they will be in financial trouble.
And here is the lesson all need to learn now: Bankruptcy does not make you a loser.
In fact, according to the Federal Reserve, “Those That File Bankruptcy Do Better Than Those That Don’t.”
People who will land in financial trouble because of the COVID-19 outbreak are no more losers than the millions who have turned to bankruptcy before them.
You don’t ask for coronavirus to ruin your financial life, it just does. And it’s the same issue for those before who had some underlying issue that drove them into a corner.
For those who avoid getting sick but feel financial pain, the hidden death will be trying to dig yourself out of a deep financial hole created by the knock-on effects of this national illness.
Let’s say you find yourself in a deep financial pit following this medical crisis. If you listen to pundits you should avoid bankruptcy at all cost and you have a duty to repay your creditors.
But at what cost? Will it make you feel better about yourself to spend the next five years digging out of a financial pit because of the coronavirus if that means sacrificing your retirement savings?
Skipping saving for retirement to repay your crushing debt from this illness makes no logical sense. In fact, let the numbers talk for you.
Here is an example:
Current Age: 25
Monthly Payment: 300
Monthly Payment After Payment Plan: 0
Length of Payment Plan: 5
Rate of Return: 10
Estimated Retirement Age: 70
Cost of Payment Plan in Retirement Dollars = $23,231.12
Retirement Cost of Payment Plan = $1,247,526.55
Are you willing to throw away $1,247,526 in retirement savings to repay $23,231,12? That is retirement savings you will need to live on after you can’t earn or maybe care for yourself when you are old and infirmed.
When the time comes, you can find a good local bankruptcy attorney and have a free discussion about what bankruptcy would mean for you. Bankruptcy is the fastest way to get a fresh start for the least amount of money.
I’m Not Here to Sell You on Bankruptcy.
Ultimately it will be your personal decision about how to handle things if you wind up in crushing debt from COVID-19. What I am trying to do is help you open your eyes and make that decision based on facts, not assumptions. I bet you’d be surprised what the bible actually says about bankruptcy.
I hope you survive the coronavirus pandemic without any financial pain but if you do find yourself in a bad spot, I’m here to help you for free if I can.
Make good choices.