According to the Federal Reserve Bank of New York estimates, about 14% of U.S. households — or roughly 17 million — owe more debt than they actually own. Many of these households could benefit from having their debts wiped out, but fewer than 1% of U.S. households actually file for bankruptcy yearly. In fact, last year only 752,160 personal bankruptcies were filed. So what is holding Americans back from reclaiming their finances? Fear.
Fear Causes “We Can Survive This” Mentality
Bankruptcy filings dropped dramatically in the second quarter of this year, to about 60% of the average for the previous five years. While borrowers have benefited from various forms of coronavirus relief, such as suspended student loans payments, mortgage forbearance, the stimulus check, and the $600 weekly bump in unemployment checks, these temporary aids have added to the dangerous “we’ll solve it later” mentality of many at-risk households.
Unfortunately, this misplaced optimism can also be a problem. The same hopefulness that causes people to take on too much debt also can lead them to put off the reckoning. Rather than seek permanent solutions in the present, families are opting to cash in their retirement savings, rainy day funds, and other financial safety nets in hopes of “weathering out the storm.”
But with the effects of COVID-19 dragging on and forbearance periods coming to an end, the reckoning period is approaching much sooner than millions of households expect.
Fear Of Losing It All
Media driven fear would have you believe that approaching bankruptcy means a hoard of moving men pulling up to your home and grabbing repossessed living room furniture and your vehicle out of your property. The reality is much more positive. Chapter 7 Bankruptcy and Chapter 13 bankruptcy can help you get rid of debts, keep your assets – like your home, furniture, and car – and secure more optimal monthly payments for your financial means.
In fact, bankruptcy can help you keep your assets and regain control of your finances so that you can build a more secure future for you and your family. Filing for bankruptcy helps thousands of families reach a stage where they are able to buy a home, pay off a big purchase, or start a new business due to being financially secure once again.
Fear Of Embarrassment
Between the unsettling feeling you get when thinking about a bankruptcy and bad stories you’ve heard whispered on media outlets – bankruptcy can seem just too personal and embarrassing of a topic. However, bankruptcy is a financial tool that businesses, celebrities, and regular people alike take advantage of every day. Well known public figures like Walt Disney, 50 Cents, and President Donald Trump have all utilized bankruptcy to secure a better financial future for themselves and their businesses. While their bankruptcies were unfolded in the public eye, most bankruptcies are done in private. No report is sent to your employer, no bulletin board listing is made in your name, and no neighbor needs to know unless you see it fit. But you and your family will be immensely better off financially due to your wise financial usage of the bankruptcy tool.
Fear Of Never Recovering
While filing remaining on your credit reports for up to 10 years the recovery process is much quicker than most think. In fact, credit scores can start to recover soon after you file. Some filers are able to work on recovering their credit within a short period of 18 to 24 months.
People can start to rebuild credit a few months after their bankruptcy case is discharged by getting secured credit cards, which require a deposit, or credit-builder loans, available from some credit unions, community banks, and online. It’s also possible to get a VA or FHA mortgage two years after a bankruptcy. And with the reduced monthly payments, you will be able to rebuild your savings much more quickly than before; putting you at a much more advantageous financial position for any future purchases.
Fear causes people to get stuck in their cycle of debt collections and payments – but it doesn’t have to be that way. Your financial future can be secured and your debt managed through the process of bankruptcy. With the help of an experienced bankruptcy attorney, you can begin your journey to a more secure future and leave the fear, loans, and stress behind you.