Salt Lake CITY The stigma associated with Bankruptcy HQ : remains, despite the fact that the two primary reasons for people to go insolvent include (1) medical expenses as well as (2) the loss of a job. These are scenarios that debtors might not be able to prevent.
A report by CNBC revealed that two-thirds the bankruptcies were due to medical issues, or due to high costs for healthcare or inability to work.
A study conducted in 2015 from the Kaiser Family Foundation found that medical bills prompted 1 million American adults to file for bankruptcy every year, and that 26 percent of Americans between 18 to 64 had difficulty pay medical expenses in accordance with the World population reviews.
Why is it that the stigma continues to persist?
The good news first.
The epidemic has shut down stores and restaurants, as well as closed work places as job opportunities dwindled. However, bankruptcies in America have risen dramatically during period of foreclosure. 496,565 claims for consumer bankruptcy were filed in the last year. The lowest amount since 1987. It’s a decline of 31% when compared to the year of 2019. According to MarketWatch.
The number of brand newly filed U.S. Chapter 7 and 11 bankruptcy cases filed during the twelve months ended 30 June 2021 was the lowest level since 1985 as per the U.S. Courts Administrative Office.
The stimulus package offered by the federal government has prevented the eviction of tenants, and has brought money into the pockets of those who are unemployed. Many were even able to settle existing debt. On May 26, 2021 Uncle Sam had sent approximately $391 billion directly to taxpayers, which brought the total amount of tax payments to 167 million, according to CNBC.
A Financial stain on your record
What is the reason he has this image? Dave Noriega and Debbie Dujanovic Ask Shane Stewart, Certified Financial Planner of Deseret Mutual Benefit Administrators (DMBA).
“You think that, regardless of whether or not it’s true it’s likely that they manipulated their funds,” Stewart said.
“That’s probably where the greatest stigma originates. The other aspect of the stigma stems from poor management, but. . . it is presumed that the person is trying to protect their debtors.
The different kinds of bankruptcy
Stewart has explained the two forms of bankruptcy he handles. The first, Chapter 7 bankruptcy, permits liquidation of assets in order to pay debtors.
In Chapter 7 “Your secured debt is discharged but you have to liquidate certain assets. There are a lot of people are choosing to choose that in actual fact, 70% of bankruptcy cases are filed in Chapter 7 because often times they don’t have anything to liquidate, “said Stewart.
Chapter 13 is a restructuring of the finances of a debtor with the approval and control from the judiciary.
“This Chapter 13 is a bit longer. You are negotiating with creditors to, over time, be patient and perhaps make fewer the payments until you begin to feel comfortable, “said Stewart, adding that “About 28% percent’ of U.S. bankruptcies are filed under Chapter 13.
But before depositing …
Before declaring bankruptcy Stewart advised seeking out a non-profit credit counselling service.
“There are also local programs within the Wasatch Front, which are funded through the grant system,” said Stewart. “They assist you in trying to manage your debt before you need to apply for bankruptcy. I’d suggest you try it out first.