Bankruptcy protection extends to people from all walks of life

February 25, 2014 (Press-News.org) 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.

Article provided by Sulaiman Law Group, LTD
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