BANKRUPTCY FILINGS COULD INCREASE AS JOB OUTLOOK GETS BETTER

Chapter 13 bankruptcy is a way for people to reorganize their debt while avoiding collection activities such as wage garnishment and foreclosure. Since 2010 national filings for bankruptcy have declined. However, even though the economy is improving, experts in the bankruptcy field say that improved employment rates may cause Chapter 13 bankruptcy, and other types of filings, to increase. This is due to consumer confidence levels rising with their income, thus increasing their comfort in borrowing and making large purchases.

Filing for Chapter 13 and other forms of bankruptcy can offer debt relief, stop foreclosure, give people a fresh start and relieve other financial challenges. However, filing for bankruptcy is a very important decision that requires a lot of thought, and should not be taken lightly. People should be informed of all the consequences and benefits of filing for Chapter 13, and bankruptcy in general.

For example, if a person is having difficulty making payments and is receiving unemployment benefits, they may have less of an incentive to file a bankruptcy claim because they have fewer wages to protect their claim. If those people become employed, they typically have more to lose, so they may file for bankruptcy to protect their wages from being garnished.

Other factors can spike the bankruptcy filing rate, as well. Experts suggest that stagnant wages, outstanding student loan debt and the rise of interest rates can increase filings.

Choosing to file for bankruptcy is a big decision, but many people in Ohio have likely found that ultimately it ends up being beneficial. Not only can it show creditors that you are serious about getting your finances back on track, it can prevent you from losing assets that may be very important to you and your family.

Source: The Tennessean, “Bankruptcy decline could reverse amid better jobs picture,” Jamie McGee, Jan. 12, 2014