The protections offered under Chapter 7 bankruptcy are nothing new. Chapter 7 bankruptcy has been in existence for a long, long time. However, in recent years, more and more people are becoming aware of its existence and, more importantly, its protections. Why has there been such an increased awareness on the subject? Sadly, more and more people are wishing to learn about Chapter 7 because they may be in dire need of its protections. The current economic climate is dire and this has led to an incredible spike in bankruptcy filings covering many different chapter categories.
For those not familiar with what Chapter 7 bankruptcy is, this would be a form of bankruptcy filing where the courts would determine which assets you possess should be liquidated and what creditors should be paid off first and how much in the aftermath of the liquidation. Needless to say, this does not sound like the road many would prefer to travel since it can be highly stressful and entails handing over financial decisions to the courts. Yet, millions of people are seeking this exact form of protection. Yes, there are literally millions of people seeking bankruptcy protection as the numbers f personal bankruptcy filings have skyrocketed in recent years.
The reason they are doing so is not because the rules of filing for bankruptcy have been made lax. Rather, the current economic climate is so dire that more and more individuals are finding themselves unable to meet their financial obligations. Why is this so? Several of the current economic factors contributing to such an outcome include:
• A collapse of the housing market has led many to lose much of their net worth. When a home is worth less than what it was paid for, serious financial repercussions can result.
• Those that currently have a mortgage and are experiencing a severe decline in value of their home are in an even worse position than someone that has already paid off their home. They are overpaying for property that no longer has equity and has gone "under water." The number of people with such a problem is well into the millions.
• High unemployment has certainly contributed to the increase in Chapter 7 bankruptcy filings. Without a steady income, it can certainly be extremely difficult to stay on top of one's debt obligations.
• Small businesses are becoming money losers. To run a small business that is losing money is worse than being unemployed because of the financial drain it causes. The overhead of a small business could drain personal finances significantly.
• The stock market and the dollar have declined greatly. Such events have occurred as the specter of inflation looms. None of these factors will prove helpful to anyone hoping to reverse a freefall of a bad financial situation.
The widespread calamity of current economic conditions has hit everyone and it has hit everyone hard. For some, the severity of the economy has hit them so hard they need to seek Chapter 7 protection as evidenced by the huge number of bankruptcy filings listed.
Will such a situation abate in the future? Only time will tell...
The author started FilingBankruptcyNow.Com which is a website that helps individuals with debt problems by putting them in touch with a local bankruptcy attorney that specializes in personal bankruptcy under Chapter 7 and Chapter 13 bankruptcy. Check our website for more answers to bankruptcy questions and ideas on how to have a debt free future.
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