Donald Trump, Bankruptcy and You

Posted on March 18, 2016. Filed under: Chapter 11 Bankruptcy, Chapter 13 Bankruptcy, Consumer Alerts | Tags: , , |

Much has been made of Donald Trump and bankruptcy.

What’s the truth and how does it hold particular insight for the financially strapped family considering bankruptcy themselves ?

This article in Politifact, a well known and well respected political fact checking website documents the reality.

“Trump doesn’t deny that four of his businesses have filed for bankruptcy. He argues, however, that filing for bankruptcy is a common business decision, and he was smart to make the moves when he did.”

As the article correctly points out, often bankruptcy, especially Chapter 11, can be necessary to protect businesses and jobs in the community.

Also, as Mr. Trump points out, it can be a smart business move to use a bankruptcy to protect that business’s viability to continue. For example, as is commonly known, Walt Disney used business bankruptcy for a failed business venture and went on to future success with other ventures.

“The purpose is to “save” the business, as opposed to other forms of bankruptcy which would liquidate the company, said Michael Venditto, a partner at the ReedSmith law firm who has extensive experience with Chapter 11.”

“We also talked to some finance experts, who told us Trump is correct that Chapter 11 reorganization is not always the result of bad business decisions.”

While it seems that businesses owned by Mr. Trump have filed for Chapter 11 bankruptcy, it does appear that the purposes of these bankruptcies was, initially, an attempt to keep the businesses operating and continuing to employ folks in the community and earn money for investors.

So what does all this mean for your family and your debt ?  Just like businesses use Chapter 11 bankruptcy to continue to pay some creditors,  families and individuals can use Chapter 13 bankruptcy to continue to pay creditors and avoid losing homes and vehicles to creditors. Also, just like Chapter 11 keeps the creditors from shutting down the business, Chapter 13 keeps the creditor from garnishing your bank account and paycheck, which would, in a sense, shut down your family by preventing you from having the resources to feed and take care of your family.

 

 

 

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