Though many fear filing for bankruptcy, it has become one of the most common options to temporarily pause difficult financial situations—and a highly lucrative business for attorneys specializing in the process.
- Though many fear filing for bankruptcy, it has become one of the most common options to temporarily pause difficult financial situations—and a highly lucrative business for attorneys specializing in the process.
- Florida and California Lead Bankruptcy Filings
- Chapter 13 Bankruptcy Is Essentially a Debt Repayment Plan Renegotiation
By Omaira Martínez Cardona – Colombian Journalist
Though many fear filing for bankruptcy, it has become one of the most common options to temporarily pause difficult financial situations—and a highly lucrative business for attorneys specializing in the process.
According to a recent report from Debt.org, one of the largest debt-relief companies, increases in bankruptcy filings often signal an economic recession.
Based on statistics from the country’s Bankruptcy Courts, after filings declined during the pandemic due to federal aid helping citizens pay their bills, insolvency declarations have steadily risen.
Florida and California Lead Bankruptcy Filings
In 2024, over 517,000 cases were filed by individuals and businesses, marking a more than 14% increase compared to 2023. California and Florida lead the nation in the number of filings.
Many factors drive bankruptcy declarations, with medical bills, job loss, and high interest rates being the primary issues.
The vast majority of bankruptcy filings come from individuals, many of them ahead of a foreclosure proceeding.
While there are different types of bankruptcy, the two most common fall under Chapter 7 or Chapter 13 of the Bankruptcy Code. The first, which is the most frequently used, involves a complete discharge of debt obligations by selling non-essential assets to settle debts.
Chapter 13 Bankruptcy Is Essentially a Debt Repayment Plan Renegotiation
Filing for bankruptcy, while it can temporarily relieve debt pressure, may also impact credit history for up to 10 years.
If a mortgage borrower files for bankruptcy under Chapter 7, there are potential consequences that require guidance from trained financial advisors and bankruptcy professionals.
In most foreclosure cases, which continue to rise in Florida, the goal is to avoid a deficiency judgment—meaning if a homeowner loses their property through foreclosure and it sells at auction for less than the amount owed, the bank or lender may take action to collect the remaining balance.
What many don’t realize is that if the property sells for more than the debt owed, the homeowner may claim the surplus after settling outstanding debts. There are also specialized companies that assist with this process.
Don’t be intimidated by the challenges that may arise during bankruptcy proceedings.
The key is to seek proper information and expert guidance to overcome the crisis, renegotiate debts, and plan for a stronger financial future. A crisis can become an opportunity to start fresh under better conditions.
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