Sometimes, people with seemingly higher incomes and large assets file a personal bankruptcy. This may be due to a temporary financial crisis or a long-term buildup of debt that the individual eventually could not handle. Bankruptcy can be a useful remedy for lawyers, doctors, and others who need to wipe out certain dischargeable financial burdens in order to move on with their lives. These considerations apply in Arkansas as well throughout the country.
When a person's unmanageable debt load reaches a critical point, constant harassment, lawsuits, judgments and even executions are the natural order of things. Arkansas citizens suffering in that circular nightmare, or who may be getting close to it, may find themselves trying to choose between a debt consolidation remedy and filing a bankruptcy. Those are really the only two options that may stop the creditors' onslaught, other than winning the lottery big-time and paying everything off.
The $1.2 trillion that is owed in the country for student loan debt constitutes the highest amount of consumer debt except for mortgage debt. In prior days, a student loan could be discharged in a bankruptcy as an unsecured debt. However, Congress has passed several laws making it tougher and tougher to do so. The problem is now critical for the economy and in the lives of many persons in their fifties and sixties, including here in Arkansas.
Surveys indicate that the credit card crisis nationwide, and including in Arkansas, has not ended. There may be more people watching their step and using credit more judiciously these days, but according to one survey by a national credit counseling foundation, a full 20 percent of those surveyed indicated they had to rely on credit cards to make ends meet. Thus, it's clear that some consumers will benefit by the bankruptcy remedy, which is an effective and powerful way to wipe out large amounts of unsecured credit card and medical debt very quickly.
In the next few years, the credit scores of people caught up in foreclosures or other financial crises during the recession, will begin to improve substantially. Not only does negative information generally fall off of one's credit record within seven years, but many people in Arkansas and elsewhere have been able to beat that clock and improve their records at a much quicker pace. According to some observers, the loosening of credit has already begun and massive new instances of defaulted credit card debt may be re-emerging.
The Affordable Care Act imposes caps on medical expenses payable by consumers in Arkansas and elsewhere. However, indications are that the caps will not change the high rate of personal bankruptcy filings that are due to overwhelming medical debt. Knowledgeable observers predict that medical bills will continue to be a significant factor in over half of all bankruptcies filed.
As layoffs continue in different industries nationwide, including in Arkansas, the need for assistance and practical resolutions for consumer debtors continues. There are two consumer bankruptcy solutions available to those who were laid off or otherwise suffered a drop in income or an increase in unanticipated expenses. They are the Chapter 7 bankruptcy and the Chapter 13 bankruptcy.
A recent article in Forbes attempts to assess certain emotional challenges that a small business owner may experience during bankruptcy proceedings. The same principles apply as easily to Arkansas consumers filing to discharge non-business consumer debt. Some tips and common sense principles should serve a person or married couple well in approaching the challenge of successfully completing a bankruptcy filing and obtaining a final discharge of debts.