When the financial crisis was at its peak, almost 1.6 million people in California and the rest of the United States filed for bankruptcy. Almost one decade later, the number of filings is less than 800,000. However, the difference in the number of filings is not an indication of economic health by itself.
Filing for bankruptcy can be very expensive, as attorneys can charge up to $1,000 to file a Chapter 7 bankruptcy. Also, it is challenging to use bankruptcy to discharge student loans. Still, many people can use the bankruptcy process to give themselves a clean financial slate.
If they do not yet own a home or other assets, young people who have accumulated substantial credit card debt can use bankruptcy to resolve those debts. The personal finance courses that have to be taken before and after filing for bankruptcy can also be helpful, allowing debtors to see their finances in a new light.
People who file bankruptcy can also take other steps to remedy their financial situation. They can begin by creating a budget that fits their income and lifestyle and make sure to use credit cards only when necessary.
A common misconception about bankruptcy is that filers will have to forfeit all of their assets. However, people who file a Chapter 7 bankruptcy may be able to retain ownership of some assets, such as homes and vehicles, if they can demonstrate they are able to pay certain debts. This can be complicated process, and individuals who would like to keep some of their assets in a Chapter 7 might consider consulting an attorney.
A bankruptcy attorney may consider a client’s financial situation and may recommend filing a certain type of bankruptcy to resolve debts. Assistance might be provided with filing a bankruptcy petition for Chapter 7 or 13.