Bankruptcy Protection Extends to People from All Walks of Life
Although bankruptcy can offer financial protection, the social stigma attached
to this option has made it unattractive to some people. Often times, people
worry that it will cause their credit ratings to plummet, affect their
ability to purchase assets in the future, and prevent them from providing
comfortable living situations for their families.
Because of the social stigma, people feel that, by opting for bankruptcy,
they are “giving up.” As a result, they experience feelings
of failure, guilt, and shame. However, bankruptcy is not surrendering
your freedom and well-being; in fact, it is acknowledging a dilemma and
resolving it in an efficient and safe way. Contrary to the social stigma,
bankruptcy can be a responsible legal option when debt rises at unmanageable rates.
Luckily, bankruptcy has become so socially acceptable that some people
opt for bankruptcy protection. Following the 2008 economic collapse, people
of every social status noticed that they had accumulated large amounts
of debt, largely because of circumstances that were impossible to predict
and completely out of their control.
As a result of The Great Recession, consumers became more aware of predatory
lending practices, which eventually led them to an even worse financial
demise. What is often forgotten is that bankruptcy exists so that it can
allow for people to financially stabilize themselves to ease the stress
of worrying about creditors day in and day out.
Two of the most common types of bankruptcy are Chapter 7 and Chapter 13.
With Chapter 7, people suffering severe debts will sell various assets
in order to pay off selected creditors. However, some Chapter 7 bankruptcies
are labeled as “no asset” bankruptcies, meaning that no assets
are sold in the process. The result of this type of bankruptcy is often
liberation of some debt and the principal balance of some unsecured debt,
such as credit card balances and medical expenses. For people who have
experienced long-term unemployment, medical issues that have prevented
them from working, and people with few assets, Chapter 7 bankruptcy might
be the most useful and productive way of stabilizing.
On the other hand, Chapter 13 bankruptcy reorganizes an individual’s
debt into a more manageable payment plan, which is often organized as
a three to five-year plan. This type of bankruptcy has the ability reduce
interest rates as well as late fees. Chapter 13 may be useful for majority
of people since it is the easiest to qualify for and allows for persons
to keep their hard-earned assets, such as their homes and cars.
Anyone Can Find Themselves in Dire Financial Straights
People of all social classes and a variety of professions have sought bankruptcy
protection. In fact, an article written by a financial planner emphasized
the author’s personal experience with filing for bankruptcy despite
the fact that he advised people on their financial matters on a daily
business. People of all stages and ranks have suffered through hard times
and used bankruptcy protection as their way out. It is important that
individuals experiencing large amounts of debt and considering bankruptcy
contact an attorney to discuss their particular situation. By doing so,
people seeking help are able to decide if bankruptcy is the best option for them.