Call our Debt Helpline Toll Free on
Book next available Debt Expert

Get Out of Debt, Fast!

What happens to the debt after bankruptcy?

What happens to the debt after bankruptcy?

You file for bankruptcy, a debt agreement or a personal insolvency agreement. All or some of the money gets “written off”, but where does it actually go? Well, it doesn’t actually disappear, it just gets transferred. Think of money like energy and imagine that it can neither be destroyed nor created but just transferred.

Keynes refers to “a revolving fund of liquid finance”. The money that you borrowed and spent is in the hands of businesses and other people, so it hasn’t been destroyed. Where did the bank get the money for your loan though? Generally, there are two sources for loans: (1) businesses or other people and their savings and (2) money borrowed (or “bought”) from other banks and institutions.

When debt is written off under bankruptcy, debt agreements or personal insolvency agreements, the money comes out of banks’ profits. Banks still have to put due money into depositors’ accounts and repay other banks and institutions on time.

Struggling with more than $8,000 of unsecured debt? You could be eligible for debt relief! Discover how to stop debt collector calls, freeze interest and fees, reduce payments and only pay back what you can afford. Start now with a free savings estimate.

Get My Free Savings Estimate

Free Debt Analysis

Request your Free Savings Estimate today, and receive a tailored solution to regain control of your finances and get out debt fast.

Safe, Confidential and No Obligation Safe, Confidential and No Obligation

Norton Security