“During 2020, there were 544,463 bankruptcy filings in the United States.” –Administrative Office of the U.S. Courts
Bankruptcy is basically a legal process that involves an individual or company who has reached a point where they are not capable of paying their existing debts. The process is initiated by a debtor(s) or by the creditor(s) who file a petition for bankruptcy. The debtor’s total assets are individually valued to determine their worth. Some or all of the assets may be used to pay the outstanding debts. The term bankruptcy can sound scary, but when you learn about the benefits, it will begin to appear more like a rescue plan.
In the United States, there are six chapters of bankruptcy:
Chapter 7 bankruptcy benefits is one of the deeply discounted legal service benefits in the Personal Legal Plan.
62% of personal bankruptcies in the United States were due to medical expenses. –Harvard University
Ultimately, it can depend on your employer. However, in most situations, filing for bankruptcy didn’t affect your current employment. It could impact you if you’re applying for a new job in the private sector.
Personal Legal Plan
Only $24.95 per month
Yes, except in unique circumstances, bankruptcy court proceedings are open to the public, such as during a global pandemic (e.g. Covid-19) or when a judge is considering a matter that is under seal.
Unfortunately, filing for any chapter of bankruptcy will drastically impact your credit score. It can reduce it by 130 – 240 points. In addition, the bankruptcy can appear on your credit report for ten years with Chapter 7 and seven years with Chapter 13.
Since 1988, consumer bankruptcies have been on the rise. In 2020, consumer bankruptcies accounted for 96.02 percent of all bankruptcies filed in the United States.
When an individual or company files for bankruptcy, their assets are liquidated to pay the outstanding debts owed to a variety of creditors. Insolvency is when an individual’s or company’s outstanding debts exceed their total assets.