Alternative Economics Can Pave Way Out from Bankruptcy

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( — August 14, 2015) — Over the years a lot of companies have been established, succeeded, and sadly to say some also failed and had to declare bankruptcy. While many would think that bankruptcy is the end road for a business, in the eyes of economics there is still a glimpse of better future. In an interesting post by Garret Jones on The Economists’ Alternative to Bailouts, he defined bankruptcy as “The economist’s version of bankruptcy (not the lawyer’s version) is simple: If what you contractually owe is (very likely) greater than the value of your assets, then you’re bankrupt.  It’s not primarily about missing a payment: It’s about the prediction that you won’t be able to repay everyone you’ve made promises to.  If your assets can’t pay off all your debt holders (including depositors) then it’s time to head to court.”

The finance industry that involves the corporate banks, the high monetary bosses, and the financial advisers, has a lot to say when it comes to debts and bankruptcy. At this point, a company may find equity as a solution to turn around its bankruptcy state. Turning your debt into equity and making it a profitable form of shares in company may sound too good to be true. However, banks are finding this a way to build up more finance for their side. Furthermore in the role of economics, some financial institutions find interest on equities which can be of aid to prosper.

Any business must remember that banks are the main players when it comes to equity, debt, and bankruptcy. When an entrepreneur or any individual for this matter is in debt and money becomes insufficient to make a good living on a day to day basis, it is a natural thinking to approach a bank and take up a loan. However, not everyone notices that this loan becomes another form of debt to a bigger corporation in exchange of paying out debts on small time players. In an article entitled The People versus the Bankers published on The Economist, you can see how the bank can actually give you a light of hope to get out of your bankruptcy or debt situation only to just be placed on their hands since you now owe them the funds you paid for your past situation.

This is why financial leaders and philosophers are proposing alternative economics to make the situation a win-win case for both parties. If we look at how banks and financial aids can help a businessman escape his bankruptcy state, it is also important to notice the after effect on himself. Will he be able to continue his business? Does he need to stop this company? Should he do a debt-equity swap to save his shares and partners? A lot of questions can keep flowing in a situation like this.  A greater review of the current system is what we need at the moment to save entrepreneurs from drowning themselves with losses.

At this point it is also good to know that some law firms are able to provide professional and acceptable assistance. According to Chapter 7 bankruptcy attorney Matt Resnik, “With a Chapter 7 personal bankruptcy filing, you can get debt relief, more disposable income, and stop the threat of foreclosure or repossession. Chapter 7 personal bankruptcy is ideal for people without significant assets who have hit a bump in the road and want a fresh start.”

This is a good point to check out since doing a bankruptcy declaration yet reassuring your audience that you can get through it is a brave move to get out of the situation. Plus, knowing that financial aid is just right at your side, then maybe in the future the alternative economics for saving those in debt can finally come.