Bankruptcy isn’t something that many American feel comfortable talking about, even though it affects well over 1 million individuals each year in the United States. Filing for bankruptcy is rarely discussed openly because there is such a strong stigma attached to it. The truth is, if you’re considering filing for bankruptcy, you certainly aren’t alone.
Here are just a few of the most interesting — and lesser known — facts about bankruptcy claims and bankruptcy laws in the U.S. today:
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- Bankruptcy is handled in federal court, which means that it doesn’t matter which state you live in; the processes are always going to be the same.
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- Filing for bankruptcy isn’t as simple as filling out a form that shows an empty bank account. First of all, you have to submit a petition to the court — which can actually be denied, in some cases. Second of all, you have to pay to file a bankruptcy claim. The fee for a Chapter 7 bankruptcy (the most common type of personal bankruptcy in the U.S.) is currently $306.
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- Personal bankruptcy cases (Chapters 7 and 13) are far more common than business bankruptcy cases (Chapter 11 bankruptcy). Consider these statistics: over one million bankruptcies were filed in the U.S. during 2013. almost 730,000 of these claims were Chapter 7 and 340,000 of these claims were Chapter 13, but just 8,900 claims were Chapter 11 bankruptcy cases.
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- The majority of personal bankruptcy claims are Chapter 7, but the court may decide that you should file Chapter 13 instead. This decision is made based off of a “means test,” which assesses your current financial situation, your expected financial state in the future, and the likelihood that you’ll be able to pay off your debts in the future.
- Bankruptcy laws are intended to protect individuals — not punish them. There are many exemptions to these laws to make sure that individuals aren’t left completely penniless and homeless, and the laws are designed to make sure that the consequences of filing for bankruptcy don’t last forever.
If you are considering filing for bankruptcy, make sure that you talk with an experienced bankruptcy attorney to determine if this legal action is the right choice for you.
