Bankruptcy Filings Increase: A Motivational Guide
When we hear about bankruptcy, the first thing that comes to mind is financial ruin. We often associate it with failure or poor money management skills. However, this isn’t always the case.
Many people file for bankruptcy due to circumstances beyond their control such as job loss, medical bills, or a major life event like divorce. With the current pandemic affecting economies worldwide, many individuals and businesses are feeling the pinch more than ever before. It has led to an increase in bankruptcy filings across the globe.
But filing for bankruptcy doesn’t necessarily mean you have failed financially. It can be a positive step towards reclaiming your financial future and getting back on track.
Here’s what you need to know about bankruptcy filings:
Types of Bankruptcy
There are two types of personal bankruptcies – Chapter 7 and Chapter 13.
Chapter 7 involves liquidating assets to pay off debts while Chapter 13 allows debtors to restructure their payments over several years while keeping some assets like homes or cars.
Businesses also have options when it comes to filing for bankruptcy- Chapter 7, Chapter 11 (reorganization) or Chapter 12 (for family farms).
Benefits of Filing for Bankruptcy
Filing for bankruptcy can provide relief from mounting debts and legal action by creditors. Once filed, an automatic stay goes into effect which stops wage garnishments and other forms of debt collection activities against you immediately.
It provides a fresh start as all eligible debts get discharged upon completion of the process allowing one a chance at rebuilding credit scores from scratch again without being weighed down by past mistakes made previously thus leading toward better financial stability in the future ahead.
The Negative Side
Filing for bankruptcy does come with drawbacks too; Credit score takes a hit since it remains on one’s credit report up till ten years depending on which chapter was filed under; As well as making it difficult to secure new credit for a while, it’s also expensive and can be emotionally draining.
However, the benefits of filing for bankruptcy tend to outweigh the negatives. It provides a clean slate and an opportunity to start over financially, which is invaluable.
What’s Next?
If you’re considering filing for bankruptcy, it’s crucial to consult with a qualified attorney who specializes in bankruptcy law. They’ll guide you through the process and help you make informed decisions about your financial future.
It’s also essential that one educates themselves on finance management skills such as budgeting, saving habits and debt repayment plans that will aid them as they work towards rebuilding their finances post-bankruptcy.
In conclusion,
Filing for bankruptcy doesn’t have to be seen as a negative experience. Instead of looking at it like one has failed financially or personally- view it as an opportunity towards creating a better financial future ahead; with proper planning post-bankruptcy filing coupled with practical money management techniques moving forward. The current pandemic has made things more challenging than ever before; however, we must take control of our lives by taking positive steps towards better financial stability.