A variety of factors cause individuals to file bankruptcy, and the majority of issues involved do not reflect abnormal circumstances. Income losses and unplanned expenses affect almost everyone to some degree. You may mistakenly assume that your situation represents a failing of sorts, but an overly critical self-assessment may not reflect a realistic outlook.
According to the Administrative Office of the U.S. Courts website, nearly 750,000 individuals filed for bankruptcy in 2019. Most of the debts discharged by those bankruptcies classified as “consumer,” which includes medical expenses, credit card bills and personal loans. These reflect common debts that may easily grow overwhelming when unforeseen health emergencies or unexpected repairs require immediate attention.
How many Chapter 7 and Chapter 13 petitions get filed?
A Chapter 7 bankruptcy liquidates a debtor’s nonexempt assets and uses the proceeds to pay creditors. About 62% of all filings fall under a Chapter 7 category. This type of filing may eliminate all or most consumer debts and enable you to keep your exempt possessions and assets.
A Chapter 13 bankruptcy petition generally helps individuals earning a steady income to enter into a manageable payment plan. Approximately 38% of petitioners file for a Chapter 13, and they may keep all of their property.
How long does the bankruptcy process take?
As reported by U.S. News and World Report, the entire process may take about four to six months. If you decide to file for a Chapter 13, the repayment plan may last between three and five years.
Once you file a petition, however, you become entitled to an automatic stay. This means that your creditors may no longer contact you demanding payment. The immediate relief provided by an automatic stay may serve as your first step in moving forward from a mountain of crippling debt.