Bankruptcy recovery plan doesn’t occur due to reckless spending; it is usually caused when a low-earning individual cannot deal with an unexpected financial setback. An all-time high value was recorded in 2008 when 2 million cases of bankruptcy were reported.
LendingTree carried out a study on the one million users it offered loans during 2017. It was found that 65% of the people had a credit score of 640 or more just within 2 years. This emphasizes the fact that reviving yourself financially after facing a monetary downfall is quite possible.
The economic recession of 2008 brought down biggies like General Motors, which has been operating for almost a century. On its 100th year anniversary, it had a debt of more than $30 billion. In June 2009, it filed for bankruptcy with the aid of government funding and made an initial public offering in 2010.
Recovery From Bankruptcy Chapter 7 Plan
Before one can understand how to get back on track after recovering from bankruptcy, it is important to know its various types. The economists have given six different types but only two hold meaning for individuals and couples. The former is also called liquidation bankruptcy as some of your assets can be sold whereas the latter allows you to reorganize your finances.
A very interesting fact to remember is that individuals form the vast majority of filers, not businesses. Back in 1980, the companies formed 13% of all bankruptcies but currently, this has reduced to only 3%. The most common causes of bankruptcies include job loss, medical emergency, divorce, or credit debt.
Consumers who choose to file for recovery from bankruptcy tend to do better after 5 to 10 years as compared to those who stay in debt. In fact, a number of filers enjoy full-time employment at some point in their lives after claiming recovery from bankruptcy Chapter 7. The U.S. court statistics reveal that 91% of Americans will hire an attorney to help them fight the case.
One must review all their assets and debts before giving a shot to filing for bankruptcy. While it may feel like a direct help from God, there are repercussions which one must be prepared for. You may even lose your home if it is in foreclosure in a recovering fro Bankruptcy Chapter 7.
It is hard to imagine that Marvel Entertainment, which is the highest grossing franchise, filed for bankruptcy in 1996. It was when the company solely relied on their comics and wasn’t into the movie-making business. Now, it owns billions of dollars as well as boats a huge fan following throughout the world.
Considering these examples, one should keep an optimistic approach as they file for bankruptcy recovery plan. You will face a financial blow and struggle for some time, but if headed in the right direction, things do start to get better with time. Just ensure that the improving score doesn’t lead you to debt one more time.
Bankruptcy – Where Does It Lead You to?
People believe that bankruptcy is an extreme measure; however, when used in the right way and at the right time, it can give you peace of mind, save you money, and allow you to get back to a stable financial position.
In June 2018, there was a 2.6% fall in bankruptcy filings as compared to June 2017. A new report by Supreme Court Chief Justice, John Roberts, suggests that the number of people filing for bankruptcy recovery plan is at the lowest in a decade.
This might be because people are afraid to pay a hefty fee to the lawyer and fail to realize the benefits which come with filing for recovering from bankruptcy. In reality, a bankruptcy declaration may help you to retrieve all your assets and improve your credit in the long run.
Apple Was Losing $1 Billion Per Year in 1997
Who can think that one company which is generating more than $800 billion revenue every year once went bankrupt? The company was at the brink of a fiscal crisis in 1997 but it never filed for bankruptcy officially.
Ironically, it was its biggest competitor, Microsoft, which saved the company from a financial breakdown by investing $150 million in it. Sources say that Microsoft did it to save face so that the regulators won’t accuse it of monopoly in the market.
With the founder Steve Jobs returning to take his position back and introducing a line of revolutionary products like iPhone and iMac, Apple was back in business and thriving more than it ever had before.
A Bitter End for Delta After 8 Decades of Operations
Starting its functions in 1924, Delta became the first airline in the world in 1979 that boarded one million passengers in a month. It was post 9/11 that a slowdown started for the company as it shed 21% of its workforce in 2003.
After bearing a loss of $2.2 billion in the fourth quarter of 2005, the company filed for bankruptcy only to recover from its weak financial position. It used its bankruptcy as an opportunity to reprioritize, modernize, and improve its customer service.
Within a couple of years, it had become the only US-based airline which was covering the six continents. It also acquired Northwest Airlines for $2.6 billion. Delta posted a 4.4% revenue growth in the last quarter of 2018 showing that the company is still going strong.
While quite often bankruptcy is considered to be the end of a company or an individual, this is not the situation in every case. It requires thoughtfully reviewing all your assets and analyzing your situation to assess the magnitude of recovery.
When conglomerates like GM, Six Flags, Nintendo, and Sbarro can come out stronger than before after filing bankruptcy, then it is possible for anyone to recover their lost spark.
Bankruptcy and its Effects on Children
Surviving the emotional pressure of bankruptcy is hard especially when you have children who are looking for answers. You are worried whether you will be able to put the next meal on the table or not and start questioning the future of your family.
Never assume that your children know nothing of what is going on in the house even though, they might not be aware of the actual reason. They can see the distress, uncertainty, and hopelessness in your eyes so do not keep them at a distance from you.
The Important Bankruptcy Numbers
In most of the cases, bankruptcy is not caused by reckless spending rather, it is due to some unforeseen circumstances like a job loss or a medical emergency. Over the last century, the number of bankruptcy filings has drastically increased in the US especially during the period of 1980 to 2005.
The majority of the bankruptcies are not filed by consumers and the businesses only account for 3 percent of them. The highest number comes from California which accounts for 17 percent of the total bankruptcies in the country. A study published in 2005 revealed that outstanding medical conditions caused 46 percent of the bankruptcies whereas other possible causes included divorce, job loss, reduced income, or an unexpected expense.
Dealing with Children During this Time
As a parent, it is always a daunting task to help the children cope with a bankruptcy recovery plan especially when they have so little knowledge about it. They may become upset as they will be deprived of the material things which their friends have and would be frightened of the future of the entire family.
There are many reputed law attorneys like Sadek and Cooper who can help in coping with the situation and devising a foolproof plan. Before seeking legal help, you should mentally prepare your child for the circumstances because navigating through the entire journey would be harder without the kids knowing. The reactions of your children will be depending upon their age.
Elementary School – These children do know what money is but would not be able to understand the complex financial terms. All you can do is let them know that they are back to spending less and saving more and the clothes from the thrift store are as good as from any of the brand.
Middle School – Kids of this age are the hardest to handle as they are mortified what their friends are going to think of them. Try your best not to pass the shame along to your kids because it would direly affect their mental health.
High School – These children are not only capable of understanding but may also lend a helping hand to support the family. Only if you deal with them through love and affection and reassure that everything is going to be all right, you can keep them bonded with the family.
With 44 percent of recovering from bankruptcy filers being couples, it is very important to understand the serious consequences of it on children and teenagers. Only with the right attitude and great legal help, one can overcome the situation and improve the lifestyle of the family yet again.