The fear of the unknown is a powerful force. Unfortunately, the fear of filing for bankruptcy and the unknown keeps many from proceeding with a bankruptcy case, even when it is the best option.
It is for this reason that only a small portion of American consumers file for bankruptcy annually, even though many of them could benefit from either a Chapter 7 or Chapter 13 bankruptcy filing. While many different reasons exist for this failure to file, a misunderstanding of the process and fear of taking that first step keeps them from moving forward.
According to the Federal Reserve Bank of New York, approximately 14 percent of all U.S households, roughly 17 million consumers, owe more than what they own. Despite this fact, only one percent of these households file for bankruptcy. In 2019, 752,160 personal bankruptcy cases were filed. The remainder of those consumers kept themselves in a constant financial struggle to make ends meet and pay bills all while dodging collection calls. This group of consumers is what financial analysts call the “missing bankruptcies.”
Arguably, the number of personal bankruptcy filings will likely go up in 2020 and 2021 following the financial struggles faced by consumers as a result of the coronavirus (COVID-19) pandemic. During this time, courthouses were closed for quite some time, which delayed foreclosures and wage garnishment proceedings, but now that courts are back in operation, the number of filings is expected to increase.
The fear of losing everything they own keeps many consumers from filing for bankruptcy. They fear that if they do file for bankruptcy, they will end up losing their homes, their retirement accounts, and vehicles. All of this can easily be cleared up through one consultation with a bankruptcy attorney who can explain the process, including the exemptions allowed through Florida bankruptcy courts.
Florida bankruptcy exemptions protect the filer’s property, including his or her home, car, retirement accounts, wages, and personal property, among other assets. In fact, the great majority of people who file for Chapter 7 bankruptcy are not required to give up any of their possessions. If the filer has concerns regarding losing assets in Chapter 7 bankruptcy, proceeding with a Chapter 13 repayment bankruptcy can protect these assets.
Consumers also forgo proceeding with a bankruptcy case due to the negative effect this filing can have on their credit reports. While a bankruptcy filing does remain on a consumer’s credit score for seven to ten years, most consumers find that, with responsible financial habits their credit can begin to rebuild sooner than seven years.
Filing for bankruptcy will not prevent the consumer from being approved for credit in the future; for example, when financing a home or a car. Many consumers have luck in obtaining an FHA or VA mortgage just two years after finishing a bankruptcy case. Other traditional mortgages require the borrower wait for at least four years. The more time that passes from when the bankruptcy was concluded, the less of an effect the case will have on the person’s credit for being approved for lending. Additionally, if a potential lender can clearly see that the consumer has no collection cases or missed payments on debts after the bankruptcy case is complete, the chances are better that he or she will be approved for a loan or for credit.
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If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.