Individual bankruptcy has long been viewed as a sign of defeat or financial failure, making those burdened by debt reluctant to file. As the news of large corporations like Toys R’ Us and Claire’s filing for bankruptcy relief dominates national headlines, average people are starting to reassess their decisions to forgo filing for chapter 7 or chapter 13 relief. The truth is that people file for bankruptcy on their own behalf or on behalf of their small business more often than many realize. Finding out how common bankruptcy is may alleviate some of your anxiety about scheduling a consultation with a bankruptcy attorney to discover if discharge is your best option.
How Many File?
Bankruptcy filings within the United States reached an all time high in 2005 after years of a documented steady increase. In 2005, over two million new bankruptcy cases were initiated, leading to concern regarding bankruptcy fraud, but over 95% of those who filed received a discharge. Economists attributed the increase in bankruptcy to the economic recession and since that peak, the number of filers has decreased. Today approximately 800,000 people file for bankruptcy relief annually. While that is still a large number, it illustrates the large decline in filings that is associated with a recovering economy.
Who is More Likely to File?
When large companies file for bankruptcy, it gets a lot of media attention. This coverage leads to many believing that businesses are more likely to file for relief than an average person. In actuality, businesses represent only 3% of all bankruptcy petition filings. People who make less than $35,000 annually and who are at least 38 years old are more likely to file than those in other income or demographic groups.
Why do People File?
Debt in general is the primary reason people consider bankruptcy. The average person who files makes $34,000 annually and has at least $30,000 worth of debt. Economic changes that lead to job loss are often cited as a cause for filing, but 46% of people blame injury or illness that led to medical debt for their financial troubles. Another common reason to file for relief is divorce since the large drop in income and loss of assets could create a situation in which bankruptcy is the only feasible option.
Should You File?
Filing for bankruptcy is a major decision that should never be made lightly. While it does damage your credit for a few years, it gives you a chance to start over financially, usually when you most need a fresh start. If you are in a situation in which your wages are being garnished, lawsuits against you are filed, and repossession of vehicles or foreclosure of property seems inevitable, then bankruptcy might be a viable option.
Once your financial situation starts to spiral out of control, seek the help of a qualified law firm like Adam Law Group. Our team is dedicated to providing you with options that accurately represent your situation. We look out for your best interests and are here to provide you with legal advice when you need it most. Contact our office today to schedule an initial appointment so that we can began providing you with the help you need.