Why More People Today are Filing for Chapter 7 Bankruptcy – and Finding Relief
If you’re struggling with debt, you know that inflation is much more than a talking point on the news or simply something to complain about when you check out at the grocery store.
For people who are unable to pay back their creditors while also trying to maintain their quality of life, inflation can cause a chain reaction, leaving you scrambling desperately for a solution.
How does inflation harm people? What can they do about it? This guide can help you understand the effects of inflation and what options are available to solve your financial challenges, including hiring a chapter 7 bankruptcy lawyer.
What Is Inflation, and How Does It Lead to Filing for Chapter 7 Bankruptcy?
Inflation is an economics term that refers to what consumers experience in the marketplace when prices for goods and services increase. When prices rise for goods and services faster than a person’s salary grows, you get less for your dollar than you did previously. And when you’re in debt, higher interest rates increase the cost of paying your debt. This acts as a double whammy on your budget.
Inflation leads to the following effects for many consumers:
- Credit card debt: You may have a budget for your groceries, gas, utilities, and all of your monthly needs, but when inflation hits, you end up getting priced out of the same products and services you’ve relied on. To keep your same buying routine, you may end up putting more on your credit card in hopes that you’ll be able to make smaller, manageable payments and things will get better down the road.
- Housing troubles: The same thing happens when you’re planning to buy a home. A neighborhood or house that you could typically afford is suddenly out of reach. This is the case for both older homes and new builds.
New builds require materials that are also going up in price. Those looking to sell their homes are also trying to make up for lost income due to the cost of their everyday expenses, so their asking prices are higher. Competition between buyers who want to try to get the most affordable price tends to raise prices, not lower them.
The housing market also takes a hit when the Federal Reserve raises mortgage interest rates on homes hoping that this will “cool” inflation by slowing down the market. A small increase in interest rates has a big impact on your potential mortgage payment.
Often, this leaves people two options – renting, which can be affected by increases, or deciding they are going to purchase the home they want anyway and taking on an overwhelming mortgage.
- Vehicles: Interest rates on car loans also rise during periods of inflation. You may still need a vehicle, but it will be more expensive. For some, it’s difficult to purchase a lower quality vehicle than you’re used to, especially if you have requirements because of your family size or business use.
- National and global challenges: The troubles that consumers experience during periods of inflation are always accompanied by other changes in the country and throughout the world. Not only are goods, services, and assets like homes and cars more expensive, but many people are still struggling with the effects of the pandemic.
Supply chain shortages raised prices as well, and some have even struggled to make the same kind of money in their industries as they did in the past, due to pandemic lockdowns and limitations. Healthcare today is more expensive, as well. We also understand it can be challenging not to purchase the things you need, even when they’re more expensive than they used to be. Advertisers are constantly after our attention and our pocketbooks.
No matter what your particular situation is, rising costs drive many people to get too comfortable with debt they can’t repay. Interest rates and fees accrue, and soon the calls and letters from collections agencies come faster and more frequently.
This is when many people start looking for a solution to get out of debt, including seeking out a Chapter 7 bankruptcy lawyer. If you do begin searching for a Chapter 7 bankruptcy attorney, know that there are law firms today that can truly help you find a new path forward.
What Can a Chapter 7 Bankruptcy Attorney Do for Me?
Filing for Chapter 7 bankruptcy can be a cost-effective solution to get you out of debt during difficult economic times. With an excellent Chapter 7 bankruptcy lawyer at your side, you may end up paying only a small portion of the amount of money you owe to creditors.
Here’s how it works when you choose the right Chapter 7 bankruptcy attorneys:
- You’ll meet with debt relief lawyers for a free consultation. They will listen to your story and customize a legal strategy to your needs.
- These lawyers will help you determine if you meet the requirements for Chapter 7 bankruptcy. This includes verifying whether you are eligible for Chapter 7 bankruptcy, which typically requires your income be under the median income threshold in Colorado (for an individual, that’s $75,710, and for a family of two, that’s $98,365. For additional family members, that threshold rises even further). If you are not eligible or if you have unprotected assets that you would lose in Chapter 7 bankruptcy, your law can present other options such as Chapter 13 bankruptcy (in which you keep your unprotected property) or debt settlement.
- If bankruptcy is right for you, your unsecured debt can be discharged with the help of your lawyers. Unsecured debt includes credit cards, payments to medical offices, broken apartment leases, and more.
- You will be able to start fresh and can even earn a 700 credit score and become eligible for a mortgage in just a couple of years. This is the biggest misunderstanding people have about bankruptcy. Most people believe their credit will be ruined forever if they file bankruptcy. In fact, it is remarkable how quickly credit recovers after bankruptcy. And how many lenders will line up to lend you money again after filing bankruptcy.
Get Your Personalized Debt Relief Solution, Including Chapter 7 Bankruptcy
The economy may get the best of many of us, but – fortunately – there are solutions in place to help us reset, learn from our mistakes, and move forward.
While it is understandable that, when faced with financial difficulties, our first instinct is to worry, point the finger, and perhaps even fear bankruptcy, these valid feelings can’t change your debt situation, even though they’re important to express.
There’s no reason to fear bankruptcy. People who think there is a stigma attached to it simply don’t know exactly what it is and assume it means that you’ve failed in some way. In reality, bankruptcy is a responsible way to take action when this solution is provided by the right debt relief team. Look for a legal team that understands the difficulties that come with the times we are living in and can offer a way out.
Learn more about how to get free of debt with the help of a superior legal strategy.