Bankruptcy Will Reshape Your Idea of Success
If I posed you the question, “Who do you imagine when you think of people who have filed for bankruptcy?,” do you picture a failed business owner, someone who is overall terrible at money management? Or, would our future president run through your head? It may come as a shock, but the latter has filed bankruptcy a whopping six times! Trump was smart to file bankruptcy and has utilized it as a financial tool to become successful.
It has been engrained in our way of thinking from very early on in our lives that bankruptcy is bad. Certain archetypal ideas never fade. These ideas have shaped the way in which we’ve lived our lives up until this point. But, some of those notions may not be entirely correct.
Bankruptcy Is A Financial Tool
Bankruptcy has gotten a bad rap over the years. It has become synonymous with failure and giving up. When, in fact, it lends the exact opposite effect; it acts as a solution to your problem and allows you to start with a fresh slate.
Admitting your loses and then finding a path to recovery is necessary for moving on. A path to recovery is exactly what bankruptcy provides. Contrary to the stigma attached to bankruptcy, it can be the best financial tool that the law provides.
Donald Trump Has Filed For Bankruptcy Six Times And Counting
“I have used the laws of this country … the [bankruptcy] chapter laws, to do a great job for my company, for myself, for my employees, for my family,” Donald Trump stated August 6th, 2016 at the first Republican presidential debate. Our very own president-elect has taken advantage of bankruptcy six times and counting; Trump realizes its power and has employed it as a business tool. Trump was smart to file bankruptcy.
Our new president’s bankruptcies allowed his companies to stay afloat while eradicating debts to banks, employees and suppliers. Personal bankruptcy allows you to do the same thing: stay afloat and get back on your feet while getting rid of debts.
Here is a quick look at each of our president-elect’s bankruptcy filings over the past few decades.
1. Trump Taj Mahal, 1991
This business’ creation was funded by $1 billion in junk bonds. Later, it could not afford the high interest (just like if you took out a 2 year ARM in 2006 that reset to 11% in 2008 or 2009, your payments would become unaffordable, yet you would be stuck because you can’t refinance without having equity). The business was failing, and had $3 billion in debt. Additionally, Trump had over $900 million in personal debt. He filed for a Chapter 11 bankruptcy in 1991. His business continued to do well, even after filing for bankruptcy. It stayed in business for 25 more years after filing for bankruptcy, then closed down in October 2016, in the midst of the financial mogul for president.
2. Trump Castle (1992)
This casino opened in 1985 and performed very well in its infancy. It became the home of the game shows, Trump Card, and Yahtzee. However, business took a downturn in the 1990s and it could not pay out $338 million in bonds owed. In March 1992, the business filed for bankruptcy. Over the following years, business was on the upswing. It underwent a few changes, although mainly just in name (it was known as Trump Marina from 1997-2011), until it was finally sold to Landry’s in 2011.
3. Trump Plaza and Casino (1992)
The plaza and casino opened in 1984. By 1992, business was on the decline. It faced an 80% drop in revenue and acquired over $250 million in debt (comparable to what happened during the Great Recession, when many families’ incomes were slashed due to job loss, and then these families racked up credit card debt to pay for household bills). In 1992, Trump Plaza and Casino filed bankruptcy at the same time as Trump Castle.
4. Trump Plaza Hotel (1992)
Trump purchased the Plaza Hotel in Manhattan in 1988. In 1992, the business accumulated over $550 million in debt. It filed for bankruptcy that year.
5. Trump Hotel And Casino Resorts (2004)
In 1995, the Trump Taj Mahal, Trump Castle, and Trump Plaza were combined with other properties under one entity. In 2004, this conglomerate had over $1.8 billion in debt and consequently filed for bankruptcy to eliminate these debts.
6. Trump Entertainment Resorts (2009)
After the above-mentioned bankruptcy of Trump Hotel and Casino Resorts, the corporation was renamed Trump Entertainment Resorts. It took a blow when the economy failed in 2008. In December 2008 it skipped a $53.1 million bond interest payment. The business filed for bankruptcy in 2009 after it accrued over $1.2 billion in debt.
Bankruptcy Makes You Smart
As seen in these telling examples from our very own president-elect, bankruptcy does not equate to failure. Filing for bankruptcy has not affected him negatively at all in the long term.
It is a law for a reason. It is there to protect you when things don’t go according to plan.
Filing for bankruptcy does not make you a loser; on the contrary, it makes you financially smart.
Find out more about how bankruptcy works and how you can stop your debt collectors from taking your money, click here to read, What Is Bankruptcy?