With the economic downturn happening now in 2020, it makes sense to be asking how your bankruptcy could negatively affect the economy. You may worry that not paying your bills is harming another business or individual or could cause a kind of chain reaction.
If you're young, one of the last things you would expect would be to have to go into bankruptcy. The reality is, though, that many younger individuals do end up going into bankruptcy for a variety of reasons.
Bankruptcies are sometimes seen as a last resort and something that people try to avoid at all costs. They are almost seen like an evil in this society, even though bankruptcy laws are a helpful protection for both consumers and businesses. They're actually very common.
When you think about a bankruptcy, what do you see? Do you imagine collectors coming and taking away your assets, leaving you with nothing? The reality is much less terrifying. The myths that surround bankruptcy have made it seem like it's a situation where people lose everything they've worked so hard for, but the truth could not be further from that idea.
Deciding to file bankruptcy is a serious decision. A bankruptcy can remain on your credit report for seven to 10 years. It may be more challenging to get new credit such as credit cards, mortgages and personal loans during that time. If you can secure credit, like an auto loan, you may be looking at higher interest rates, larger down payments and the possibility of needing a co-signer.
There are two primary ways that individuals end up in debt — by living beyond their means and being confronted with unexpected bills. The latter can happen as a result of a medical emergency, job loss, divorce, death of a spouse and other non-planned events. While it would be ideal if everyone could pay their bills off, many can't. Debtors often look for debt relief options and end up choosing bankruptcy. It's not necessarily always the best choice for them, though.
Medical bills are a huge concern for millions of Americans. These expensive bills might be reduced some by health insurance coverage, but there are still some individuals who are dealing with very high balances on these accounts. If something unexpected happens, such as a job loss, a person's ability to pay for those bills might be limited.
No one takes on debt thinking that they'll be unable to pay it. Whether debt is accumulated because of a medical emergency that is out of their control or because they have enough of an income to justify it, most people have a plan for paying it back. Even if they pay just a small amount monthly, they make ends meet.
In the United States, bankruptcy is designed to help those who cannot pay their debts. It helps them start fresh, either through liquidating their assets or by creating a repayment plan that allows them to pay what they owe over time.
Going into bankruptcy can be a tough decision, even if you've been struggling with debt for a while. According to the U.S. Bankruptcy Court in the Eastern District of Tennessee, Chattanooga, Greenville and Knoxville had a total of 594 bankruptcy filings in May, 2020.