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Bankruptcy could offer a lifeline

| Nov 10, 2020 | Bankruptcy

There is no doubt that we live in a historic time, but unfortunately, not for good reasons. Many are seeing their financial lives collapse around them, even as their debts continue to mount. This is why bankruptcy has become such a hot topic recently, and it is also why bankruptcy is slowly losing its “dirty word” status.

Filing numbers

Every year, over 700,000 people file for bankruptcy in federal courts. In fact, nearly 900,000 bankrupcy cases were filed in 2015 alone. This is because federal judges can wipe away debts with the stroke of a pen.

Student debt a new driver

A lot of debtors’ main concerns revolve around student debt. Behind only mortgage debt, student loan debt is the largest debt in the U.S., account for over $1.6 trillion and affecting 43 million citizens. This has tripled over the last decade, and shows no sign of abating as the average graduating balance is about $30,000 for the majority of graduates.

Bankruptcy options

For those suffering from a crushing debt burden though, bankruptcy can offer a financial lifeline to reset one’s finances. Through a Chapter 7 bankruptcy, one can have most of their debts eliminated, while still keeping their home, car and most of their personal possessions.

And, if one does not qualify for a Chapter 7 bankruptcy, a Chapter 13 bankruptcy is still an option. In a Chapter 13 bankruptcy, rather than an immediate erasure of debts, debts are reorganized and a three- to five-year payment plan is created. At the end of this term, the remaining debts are largely discharged, and one can still keep their home, car and most of their personal possessions.

The key though for Houston, Texas, residents is to call an attorney. An attorney can help advise a person on their individual circumstances to determine their best course of action. They can then help residents navigate the system to get their fresh financial start.