Check out these little known facts to see if bankruptcy can help you.
Bankruptcy is much more than just getting rid of credit card debt and medical bills. Here are some little known ways bankruptcy might help you chart your financial future.
It is not unusual to hear of 20-somethings coming out of school with $100,000 or more in student loans. You probably can't use bankruptcy to eliminate them, but you can use bankruptcy to manage them. Here's how: Can I use bankruptcy to manage my student loans?
That's how many people who file for bankruptcy and never lose any property to the bankruptcy trustee. For most people, all of their property is exempt. That means they get to keep it. Learn more about exemptions here: Bankruptcy Exemptions, Schedule C.
Frankly, I'm not sure about that figure, 1 in 10. I heard it a number of years ago. Not being a statistician, I can't verify the accuracy. But this is what I know:
From 1980 through 2013, we can estimate that approximately 43,000,000 individuals filed either Chapter 7 or Chapter 13 bankruptcy. This is based on the number of cases filed, plus a joint filing spouse in 32% of the cases.
In 1980, the US population over 18 was approximately 170,000,000. In 2010, the US population over 18 was approximately 232,000,000.
As compared with the 2010 adult population, about 1 in 6 has filed bankruptcy. I know . . . you can't compare apples to oranges. I hope someone out there can do the math and set us straight. Regardless, 43,000,000 is a large number, is it not?
You can use Chapter 13 to help you get back a car that's been repossessed. Chapter 13 can also help you manage your past due car payments and even reduce the interest rate or allow you to pay just the value. See What is Chapter 13 Bankruptcy?
Like child support, alimony, income taxes, and mortgage payments. See What is Chapter 13 Bankruptcy?
Unfortunate, but true. Since 2005, the Bankruptcy Code has included a means test, which helps determine if someone makes too much money to qualify for a Chapter 7 case. Fortunately, most people who can't qualify for a Chapter 7 will be able to file Chapter 13 and make payments on their debts over three to five years. See What is Chapter 13 Bankruptcy?
Even if you can't file Chapter 7, Chapter 13 is a bargain:
Balances on unsecured debt are fixed on the filing day. No more interest or late charges.
Only proper claims will be paid. Not all creditors will file proper claims, some creditors will not file at all, but the debts will be discharged anyway.
Your payments are based on your disposable income and not credit card minimums, and they are capped at five years.
See What is Chapter 13 Bankruptcy?
The US eliminated imprisonment for debt under federal law in 1833. But, people are imprisoned for debt every day in this country:
Here's an example: Owe money? It can land you in debtor's prison.
It's called rejecting a lease. It's the same provision that encourages big companies like American Airlines and General Motors to file Chapter 11. You reject your apartment lease; they reject their union agreements and pension plans.
Most personal income taxes more than three years old, along with the interest and penalties, can be discharged; more recent taxes can be paid out as part of a Chapter 13 plan. See Taxes and Chapter 7 Bankruptcy.
1. You can use bankruptcy to manage student loans.
It is not unusual to hear of 20-somethings coming out of school with $100,000 or more in student loans. You probably can't use bankruptcy to eliminate them, but you can use bankruptcy to manage them. Here's how: Can I use bankruptcy to manage my student loans?
2. 98%
That's how many people who file for bankruptcy and never lose any property to the bankruptcy trustee. For most people, all of their property is exempt. That means they get to keep it. Learn more about exemptions here: Bankruptcy Exemptions, Schedule C.
3. 1 in 10 people have filed bankruptcy, or is it 1 in 6?
Frankly, I'm not sure about that figure, 1 in 10. I heard it a number of years ago. Not being a statistician, I can't verify the accuracy. But this is what I know:
From 1980 through 2013, we can estimate that approximately 43,000,000 individuals filed either Chapter 7 or Chapter 13 bankruptcy. This is based on the number of cases filed, plus a joint filing spouse in 32% of the cases.
In 1980, the US population over 18 was approximately 170,000,000. In 2010, the US population over 18 was approximately 232,000,000.
As compared with the 2010 adult population, about 1 in 6 has filed bankruptcy. I know . . . you can't compare apples to oranges. I hope someone out there can do the math and set us straight. Regardless, 43,000,000 is a large number, is it not?
4. Car repo'd? No problem. Chapter 13 can help.
You can use Chapter 13 to help you get back a car that's been repossessed. Chapter 13 can also help you manage your past due car payments and even reduce the interest rate or allow you to pay just the value. See What is Chapter 13 Bankruptcy?
5. You can use Chapter 13 to catch up on other important debts, too.
Like child support, alimony, income taxes, and mortgage payments. See What is Chapter 13 Bankruptcy?
6. Some people can't qualify for Chapter 7.
Unfortunate, but true. Since 2005, the Bankruptcy Code has included a means test, which helps determine if someone makes too much money to qualify for a Chapter 7 case. Fortunately, most people who can't qualify for a Chapter 7 will be able to file Chapter 13 and make payments on their debts over three to five years. See What is Chapter 13 Bankruptcy?
7. Chapter 13 stops accrual of interest, late fees and other charges.
Even if you can't file Chapter 7, Chapter 13 is a bargain:
Balances on unsecured debt are fixed on the filing day. No more interest or late charges.
Only proper claims will be paid. Not all creditors will file proper claims, some creditors will not file at all, but the debts will be discharged anyway.
Your payments are based on your disposable income and not credit card minimums, and they are capped at five years.
See What is Chapter 13 Bankruptcy?
8. There are no debtor's prisons in the US.
The US eliminated imprisonment for debt under federal law in 1833. But, people are imprisoned for debt every day in this country:
- For failure to pay court fines.
- For failure to pay child support.
- For failure to attend hearings in credit card lawsuits.
- For hiding collateral to prevent repossession.
- For passing a bad check..
Here's an example: Owe money? It can land you in debtor's prison.
9. If you file bankruptcy, you can break your lease.
It's called rejecting a lease. It's the same provision that encourages big companies like American Airlines and General Motors to file Chapter 11. You reject your apartment lease; they reject their union agreements and pension plans.
10. You can eliminate old income taxes.
Most personal income taxes more than three years old, along with the interest and penalties, can be discharged; more recent taxes can be paid out as part of a Chapter 13 plan. See Taxes and Chapter 7 Bankruptcy.