Bankruptcy is extremely misunderstood, today more than ever, as more and more people are turning to attorneys seeking its protection. The concept behind Bankruptcy (or BK as it’s called), is simple: to create a fresh start without the burden of an overload of debt. The notion is honorable and the effect of getting out from under crushing debt can be dramatic. Some of the greatest success stories in our popular culture include a phase of bankruptcy.
The problem is that the protections offered in bankruptcy are more difficult to use than ever before. This is as a result of The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. This Act was crafted by the banks and credit card companies to make it more difficult to get BK protections. Not to mention, that if you talk to most BK attorneys, they will tell you that the least likely place to be left with any of your assets is in front of a Bankruptcy Trustee.
So what about Asset Protection? Asset Protection works from the opposite side of the equation. Instead of laying all your assets on the table in front of a bankruptcy court and hoping for the best, asset protection focuses on protecting your assets directly from collection efforts. The outcome is often far better since many creditors choose to settle with you for far less than the total obligation just to avoid having to fight through your structure, even if they think they can. And with a good plan that is a BIG IF!
A properly drafted asset protection plan in many cases will be impenetrable to a judgment creditor and they will be happy walking away with almost nothing. Try getting that outcome in a bankruptcy court.
The bottom line is that if you are in a position to consider bankruptcy, I would strongly recommend that you also get an analysis around the options that may be available to you through asset protection. Each situation is very different and the options available will depend on the specific facts of your case. But Knowledge is Power, so do yourself the favor of getting all the information you can.
