Bankruptcy In America: Why It’s Expected To Rise And What You Need To Know

Bankruptcy is predicted to rise in America in 2021. Businesses that struggled throughout 2020 are having a hard time recovering, and that means many of them may soon be shutting down. With that comes a rise in business bankruptcies - and personal ones.

Businesses that file for bankruptcy put their employees out of work. That, on top of a year of shutdowns, layoffs, and Covid-19 illnesses, paints a bad picture for many workers. People are struggling to keep their bills paid, and household debt is rising.

These factors together indicate that we may be headed for a year of increased bankruptcies. So what do you need to know about bankruptcy if you’re one of the Americans who may be facing it?

You’re Not Alone

Financial trouble can feel like a personal failure. You may feel like you’re the only one who’s in this kind of a mess, but that’s far from true.

• Ohio has had more than 36,000 people file for bankruptcy in the last few years.

• Utah has the third-highest credit card debt per person, about $11,000 per adult.

• Mississippi has the second-worst unemployment rate in the country, and over 12,000 bankruptcy cases a year.

As you can see, people all over the world are filing for bankruptcy, but guess where the highest bankruptcy rates are… In the South, and Mississippi is one of the states financially struggling the most. For every 100,000 residents in MS, there are 361 bankruptcy filings… That statistic is quite alarming for that state but it’s also a reality check for many Mississippi residents.

The majority of those filings are from households with an annual income lower than median annual incomes. On top of that, Mississippi residents are dealing with job loss from the COVID-19 pandemic. To be placed in a financial hardship like that, it’s no wonder residents are seeking legal help from the top bankruptcy attorneys in Jackson, MS to get their finances back on track without collectors seizing all their belongings.

The truth of the matter is that no matter where you live, you’re going to encounter debt, and no matter how much you try to avoid it, credit is king, and you’re going to have to endure a little bit of debt to make major purchases like a house or car. That reason alone is why 80% of Americans have debt, and the average total is over $60,000.

Chances are, most of the people you know are in the same situation, so there’s no need to feel ashamed or embarrassed.

You Won’t Lose Everything

Despite what you may think, you don’t lose everything when you file for bankruptcy. Actually, you may not lose any of your property. In a Chapter 13 bankruptcy, you agree to a repayment plan that allows you to keep your property while repaying your debt.

A Chapter 7 will mean not having to repay your debt (with some exceptions for any money you owe to the government), but some of your property can be sold for debt collection. Exemptions can be made, and your lawyer will advise you on the best approach. Your options will depend on your situation.

If you’re currently in the bankruptcy filing process, you need an attorney. The state laws are complicated, so it’s best to reach out to someone local. By acting immediately you can stop a foreclosure, save your wages from garnishment, and stop debt collectors from calling you.

Don’t Try To Be Tricky

It might be tempting to make a few purchases when you know you’re about to start your bankruptcy filing. People often think that a little more debt can’t possibly hurt, but it can get you in trouble for fraud.

Bankruptcy fraud is when you intentionally make purchases 70 to 90 days before filing and then try to claim those purchases. Instead of the debt being forgiven, the creditor you owe money to can argue that you committed fraud. That can get your request for a bankruptcy discharged, and ruin your chance at having any of your debt cleared.

You’ll also want to avoid any tricky maneuvers like signing property over to someone else in your family. That can be seen as fraudulent conveyance and then be undone. It’s best to avoid any large transfers of money or purchases of land or valuable property during the three months preceding your filing.

Bankruptcy Falls Under Public Record

Bankruptcy documents are public information unless sealed by the court. That means that your employers, clients, creditors, and landlords can find out that you’ve been through bankruptcy. You must understand this, as that information could be used to make important decisions about you.

There are protections in place to prevent your current job from firing you and to prevent government agencies from discriminating against you. Unfortunately, there aren’t many protections in place to prevent bankruptcy discrimination when it comes to potential employers, landlords, or private corporations. Even if there were, you’d have to prove it was happening and people may not admit that your bankruptcy is why they rejected you.

With bankruptcy in America potentially on the rise, you must know all the facts. If you’re currently being affected by bankruptcy, reach out to an attorney to help you reach the best possible outcome.

This article does not necessarily reflect the opnions of the editoris or the management of EconoTImes