Three years back, Iceland's entire financial system collapsed and despite being unable to bail itself out of its economic troubles on its own, the country is already recovering quickly and strongly.
As a result, there are valuable lessons anyone considering bankruptcy here at home (or even other countries) can learn from the this spate of Icelandic insolvency and what the Nordic nation ultimately did to solve it and emerge stronger than ever.
Iceland’s total financial collapse in 2008 culminated in all the banks and savings institutions — even insurance companies — going bankrupt in a day.
Neverthless, three years on, the President, Olafur Ragnar Grimmsen tells Marketplace that Iceland is doing better than ever. “We are coming out of this crisis earlier and stronger than anybody, including ourselves, could have expected.”
As Marketplace put it, “Iceland is growing again -- and faster than many countries in the Eurozone. That's partly because it's not in the Eurozone. It has its own currency. That fell like a stone after the crisis. And that, says economist Magnus Arni Skulason, made Iceland's exports much cheaper and boosted its main industries. ‘Fisheries, aluminum exports and tourism. And those industries have been doing very, very well.’”
Another key to the “good collapse” that was Iceland’s bankruptcy, was that the country avoiding bailing out its failing banks. Instead, foreign creditors took a huge loss, why Iceland’s taxpayers avoided holding the bill.
“The lesson from Iceland at this stage seems clear: when your banks are crippled with debt and the creditors are mostly foreign, you should swallow your national pride, and let the banks collapse.”
Another lesson for individuals seeking the safe havens of bankruptcy is that it’s worth swallowing your personal pride to dispense with debt immediately, without trying fruitlessly to bail yourself out in other ways. This means acknowledging that your financial situation is out of control and there’s not enough income coming in to handle to debt that needs to be paid out.
With few exceptions, the ultimate effect of a bankruptcy discharge is that your personal liability for your debts is discharged. Period. As in Iceland’s case, where bankruptcy not only meant a fresh start for the country, it relieved taxpayers on holding the bill, a Chapter 7 bankruptcy can dispense unsecured consumer debts without draining your savings, messing with your retirement fund, and leave yours or your families college funds intact. And like those Scandiniavian folks, a Chapter 13 bankruptcy can provide relief in as little as three years—allowing you to repay your creditors while also holding on to valuable assets, like your car, boat or house, that you’d like to save in the process.
And so while unemployment, arrears in a mortgage, and other unexpected challenges and expenses for you or your family members may be life-altering, they need not break your own beleaguered budget.
Bankruptcy provides, in the form of Chapter 13 and Chapter 7, an undeniable array of options for those with mounting debt and facing foreclosure that even a country could love.
The key is knowing who can help. A qualified bankruptcy attorney can assist proud, but struggling, citizens to conquer their fears of losing it all. Specifically, the bankruptcy attorneys at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to 1-888-234-4181, or during the off hours, you can make your own appointment right online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button. We’re here to help.