In the context of personal bankruptcies, it’s not irresponsibility that has prompted the increase in filings during these times of economic hardship. Many Americans have lost their jobs or had their hours cut. In some states, personal bankruptcy filings are up substantially, while in others, there isn’t a significant increase. Along with job loss, another factor that contributes to the increase are where a person lives. That’s because some states are more liberal on who might be a suitable candidate for a Chapter 7 or Chapter 13. Another factor is that some states are simply more populated than others. Being the state with the largest population, California is typically the state that is at or near the top of the nation in new bankruptcy filings.
Why People File for Bankruptcy
Aside from job loss, the top reason why people file for bankruptcy is unexpected medical expenses. Divorce came in third place. Those were some of the top reasons 10 or 15 years ago too.
The Benefits of Filing for Bankruptcy
The intention of most people who file for personal bankruptcy is to protect their household assets from creditors. Those assets are their homes, cars, and their earnings too. Upon the filing of a bankruptcy petition, an automatic stay order is entered that prohibits nearly all creditors from taking action against the debtor until further order of court.
You’ll want to consult with a bankruptcy law Orlando-located before deciding whether to file for bankruptcy and whether you might file for a Chapter 7 proceeding or a Chapter 13 reorganization. That’s because there is a means test involved in personal bankruptcies to determine whether you have sufficient funds to pay off at least some of your debts. That test might dictate whether you bring a Chapter 13 petition rather than a Chapter 7.