Who Declares Bankruptcy?
People considering personal bankruptcy may be wondering who declares bankruptcy in the United States. While some people seem to think that only a certain type of person needs the help of bankruptcy protection, the truth is that people of all walks of life have turned to the bankruptcy court for help.
How could declaring bankruptcy help you? The answer depends on an evaluation of your financial situation. For more information, you can connect with a local bankruptcy attorney - just fill out the form below to get started.
What Type of Person Declares Bankruptcy?
The truth about bankruptcy is that it doesn't "happen" to one specific type of person. Rather, the people who find they need bankruptcy's protection from creditors and relief of debts tend to come from a variety of backgrounds. Here are a few reasons why you might need to declare bankruptcy:
- Unmanageable mortgage payments: The housing boom and bust of a few years ago highlighted this particular aspect of bankruptcy protection. Chapter 13 bankruptcy especially is regarded for helping homeowners catch up on mortgage payments and/or make alternate living arrangements while they rearrange their finances and repay some of their debts.
- Unexpected illness or injury: Another common trigger for filing bankruptcy is an unexpected medical event. Tens of millions of Americans are either uninsured or under-insured, which can mean that even a small injury or minor illness can lead to serious financial trouble. And, in one recent survey of bankruptcy filers, more than half of them noted that some sort of medical debt contributed to their need for bankruptcy protection.
- Divorce or other family events: Major life events tend to come with large price tags, and divorce is no exception. Plus, the strain of trying to support two households on the income that used to support only one can lead many people to the sort of debt that only bankruptcy can ease. Similarly, an unplanned birth or death can lead to financial turmoil.
- Job loss (or partial job loss): Another unfortunate lesson our country has learned since the beginning of the Great Recession is that job stability is nothing to take for granted. Unemployment and underemployment can cause serious money trouble, especially if you and your family have any kind of debt (including credit card, mortgage, auto loans or student loans).
How Can Declaring Bankruptcy Help with Debt?
The protection bankruptcy offers is not limited to those people who have had a traumatic life event, though. Any person who finds herself unable to keep up with the debts she owes may want to consult with an attorney to see if she has the option of declaring bankruptcy.
Declaring bankruptcy can offer the following protections:
- Protection from creditors: When you file your bankruptcy case, a legal protection called the automatic stay takes effect and prevents collection of all kinds (including repossession, foreclosure, wage garnishment and more).
- Time to catch up on debts: If you choose Chapter 13 bankruptcy, your case will give you three to five years to catch up on payments for your secured debts.
- A discharge of debts: If you choose Chapter 7 bankruptcy (or make all payments required by the Chapter 13 repayment plan), the bankruptcy court may offer you a complete discharge of some or all of your unsecured debts.
Should You Declare Bankruptcy?
To find out whether declaring bankruptcy might help you with your financial situation, take this opportunity to connect with a bankruptcy lawyer practicing in your area. You can arrange a free, no-obligation consultation. Just fill out the case review form on this page to take action today.