Thoughts of bankruptcy often bring distress because of a misleading societal myth that a lack of responsibility causes financial problems. Many hardworking and responsible Americans, however, find themselves struggling when facing several pressing financial issues at once.
Increases in food and housing costs create hardships for individuals living paycheck-to-paycheck. As reported by CNBC, more than 30% of U.S. adults surveyed stated they find themselves out of funds before the next payday. Out of nearly 3,000 respondents, about one in three earning at least $100,000 per year also claimed to have run out of cash between paychecks.
Facing large and unexpected emergency expenses
While it may help to reduce grocery bills or request a less costly phone plan, an unexpected emergency could devastate a household’s finances. Unanticipated repairs or medical bills could easily overwhelm an already stretched budget.
Without substantial savings, an emergency may result in serious monthly bill juggling. According to research reported by Kiplinger’s Personal Finance magazine, Americans attempt to dig themselves out of their financial situation for 24 to 36 months before filing bankruptcy.
Finding workable options for financial relief
When an individual has income, but cannot meet his or her creditors’ terms, a Chapter 13 bankruptcy may provide an affordable court-approved plan. By working through the court system, debtors may repay creditors over five years and also have the remaining balance discharged.
Households lacking sufficient income to enter into a payment plan may qualify for a Chapter 7 bankruptcy. A petition may discharge most credit card and medical bills for Louisiana residents earning below the state’s median household income.
Individuals facing financial hardships often think others will blame them for their circumstances. This may lead to an unfounded fear of bankruptcy as a workable solution, but a Chapter 13 or Chapter 7 filing may represent a realistic approach to a fresh start.