Bankruptcy protection extends to people from all walks of life

Bankruptcy protection extends to people from all walks of life

The perceived social stigma attached to bankruptcy makes filing
for financial protection unattractive to some. Many people worry
how bankruptcy will affect their credit rating, future purchasing
power and their ability to provide for their family. Bankruptcy can
feel like “giving up” — there may be feelings of personal failure,
or guilt and shame when contemplating bankruptcy. But bankruptcy is
not waving a white flag of surrender; it is acknowledging a tricky
problem and resolving it in the best way possible. Contrary to many
popular notions, bankruptcy is a responsible, financially sound
legal option when unmanageable debt arises.

Fortunately, it has become a more accepted fact in today’s
society that some people need
bankruptcy protection
. After the economic collapse in 2008,
people from every socio-economic status realized that they may have
become encumbered with too much debt, in large part because of
circumstances that were hard to predict or out of their
control.

The Great Recession also sparked consumers to become more aware
of predatory lending practices and other misbehavior by some
financial institutions that can make it easy for the unwary to fall
into a financial hole. Bankruptcy exists because it is a necessary
and vital economic tool; one that can put a person back on sound
financial footing and ease the stress of dealing with creditors on
a daily basis.

Bankruptcy eligibility

There are two common types of consumer bankruptcy: Chapter 7 and
Chapter 13 bankruptcies. In Chapter 7, people who are suffering
from severe economic hardship may sell off a number of assets to
pay off what creditors they can. Many bankruptcies are designated
as “no asset” bankruptcies—in a “no asset” Chapter 7, no assets are
sold. Chapter 7 often results in the
discharge
of some debt, and even the principal balance of some
unsecured debt such as credit card balances and medical debt.
Chapter 7 is useful to those who have experienced long-term
unemployment, medical issues that prevent working, and individuals
with few personal assets.

Chapter 13 bankruptcy reorganizes debt into a manageable
three-to-five year
payment plan.
Chapter 13 can also reduce interest rates and
late fees. The primary benefits of Chapter 13 bankruptcy are that
it is easier to qualify for and it allows the debtor to keep
hard-earned assets such as a home and car.

Anyone can find themselves in dire financial
straights

People of all professions have sought bankruptcy protection. A
recent
article
by a financial planner highlighted the author’s own
personal experience with bankruptcy, even though he advised people
on financial matters for a living. Bankers, business owners and
professionals of all stripes have fallen on hard times and sought
bankruptcy protection. People who are in debt and contemplating
bankruptcy should contact an experienced bankruptcy attorney to
discuss their financial situation and to see if filing for
bankruptcy is right for them.

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Bankruptcy protection extends to people from all walks of life