Whenever the economy isn’t doing well, it’s more likely that people will turn to bankruptcy. In 2020, many people struggled to make ends meet. Millions of people are out of work, so it would make sense to see an uptick in personal bankruptcies.
Interestingly, that hasn’t happened so far. The government intervened, in some ways, to prevent mass bankruptcies. However, there is a prediction that 2021 will be a significant year of bankruptcies for the country.
In a best-case scenario, a bankruptcy eliminates a person’s unsecured debts. In some cases, those debts are restructured or reduced, so that they are more affordable for them over time. Chapter 13 bankruptcy places people on repayment plans, so they have up to five years to repay what they owe.
How many personal bankruptcies are there each year in the United States?
The United States sees around 750,000 personal bankruptcies annually. The average person who files while under the age of 65 owes $91,964 in debt. The net worth of those who are over the age of 65 and file for bankruptcy is an average of negative $17,390, showing just how significantly bankruptcy could help.
Bankruptcy does have benefits and downsides, so it’s worth taking the time to see if the benefits outweigh the harms in your case. Bankruptcy can help you get back to financial stability and wipe out unsecured debts. It also stays on your record for up to 10 years and may impact your ability to get credit or take out loans.
Some types of debt won’t be able to be eliminated through bankruptcy, but bankruptcy immediately helps with concerns such as pending foreclosures or the loss of utilities or services in the home.
At what point should you file for bankruptcy?
It’s important not to file for bankruptcy at the wrong time. It’s usually a good idea to wait until you won’t be taking on any additional debt. Many people wait until they’ve found work and have their debt at a peak, so that the bankruptcy’s assistance is maximized.
Your attorney can give you more information and help you decide if a bankruptcy is the right choice for you. There are benefits, so it’s worth considering them.