When an Alabama consumer’s debt situation reaches the point where financial problems prove insurmountable, they might wonder if others are in the same situation. A quick look at the number of bankruptcy filings reveals many people seek protection from the courts to deal with financial woes. Bankruptcy is a viable way for people of all ages and economic backgrounds to seek a reasonable solution to their debt situation.
Persons filing for bankruptcy protection
A review of bankruptcy demographics reveals that many filers make $30,000 or less yearly. These people often have a high school education and are relatively younger than filers or previous generations. The inability to pay massive medical debts ranks as a top reason people file for bankruptcy. Someone making a relatively low salary may never find a way to pay tens of thousands of dollars, if not hundreds of thousands, of medical bills. So, bankruptcy becomes their path to restoring financial stability.
Of course, older people and those with college degrees file for bankruptcy. And reasons outside medical debts, such as credit card borrowing or business losses, factor into reasons for filing.
The rules of bankruptcy
Under federal bankruptcy laws, someone overwhelmed with debt could seek to restructure obligations under Chapter 13. Chapter 13 bankruptcy allows the debtor to devise a payment plan to pay off a portion of their debts, while some debts face a discharge. With Chapter 7 bankruptcy, those who pass the means test may forgo a payment plan, liquidate assets to pay some debts, and have some debts discharged.
Not all debt is dischargeable. A further review of the bankruptcy process and its rules might make someone more comfortable about pursuing its protections.