Bankruptcy filings continue to decline despite soaring credit balances


As per US courts that there are fewer Americans are turning to bankruptcy courts for settling their personal financial problems. Here’s when it may be worthwhile filing bankruptcy for Chapter 7 or Chapter 13 bankruptcy.

The number of bankruptcy filings fell when the coronavirus pandemic started in March of 2020 when the balances of revolving loans fell dramatically. Even though revolving balances on credit increased dramatically in 2021 however, bankruptcy filings continued decrease steadily. If you have financial questions, you may contact BankruptcyHQ.

Personal bankruptcy filings decreased by 29.1 percent in the period ending September 30, as per the United States Courts Administrative Office. Chapter 7 and 13 annual bankruptcy filings reached 418,400 in 2021. That’s a drop from 590,170 in the year 2020.

HOW to re-build credit after BANKRUPTCY

There are many reasons bankruptcy filings have decreased from the time of this pandemic. One reason is that consumers are less in debt to their credit cards over this time. As per the US court report, the increase in benefits from the government, such as the stimulus checks, foreclosure moratoriums and eviction restrictions could have “relieved the financial burdens of many households”.

Recent information obtained from Federal Reserve shows that revolving credit balances increased 7.7 percent across the country in 2021 , which means certain consumers might be thinking about filing for bankruptcy in order to repay unsecured debts such as personal loans and credit cards.

Read on to learn the best way to determine whether you need to file for bankruptcy, and also other options for debt repayment such as credit consolidation. If you choose to apply for personal loans to pay off debt, go to Credible to evaluate interest rates from a variety of lenders.

The rising credit balances have not yet to fuel demand for bankruptcy

The outstanding balance of Revolving loans dropped dramatically during the beginning of the pandemic According to the Fed in the period when Americans took a frenzied approach to paying off their credit card debt and stayed away from getting new loans. However, as the nation’s economy re-enters the market and unemployment rates are back to pre-pandemic levels, people are returning to their old borrowing routines.

The balances on credit cards that are revolving increased by nearly every month in 2021, ranging from $961.5 billion at the beginning of January, to $1.04 trillion by November. This indicates that consumers are carrying greater balances in their accounts with credit card companies, auto personal loans and loans.

Revolving credit balances, April 2020 - present

How TAX REFUNDS can help increase your credit score

If you’re a consumer struggling to pay the debts they owe, filing bankruptcy may be a great option to get relief financially. There are also other options for debt repayment including debt counsel, debt control programs and debt consolidation loans. This is why it is crucial to know the options available to debtors. .

If you’re thinking of taking out a personal loan as a means of debt consolidation, go to Credible to see the estimated terms of your loan for free without impacting your score on credit. This will help you determine whether this is the right option for you.

What are the steps to determine whether or not your company should file for bankruptcy

The legal process of bankruptcy which aims to assist people regain control over their financial situation. There are two kinds of bankruptcy available to people: Chapter 7, known as liquidation bankruptcy or Chapter 13, also known as Reorganization bankruptcy.

Insolvency filing could help you pay back your debts on better terms, and also reduce the amount of debt you owe. However, it comes with severe penalty, such as a long-lasting mark on the credit report. In addition, bankruptcy is a legal process that is public that usually requires the help of a bankruptcy lawyer. Because of this the bankruptcy process is usually viewed as an option last option.

However, despite its disadvantages it is possible to find situations where bankruptcy can be beneficial according to the National Credit Counseling Foundation (NFCC). Here are some good reasons for filing for bankruptcy:

  • It is far more crucial to pay off your outstanding loans than net assets or net worth.
  • Your earnings are not enough to cover your financial obligations
  • Creditors are suing you to collect your debts, leading to wage garnishment
  • You are planning to take out a loan to pay your bills and other expenses
  • Your home is in danger of foreclosure

Any of these scenarios could be a reason to declare bankruptcy. However, you must also think about your other options for managing debt. There is a chance to improve any financial issues without having to file for bankruptcy. Visit Credible to speak with a professional loan advisor who can guide you through the options for debt consolidation.

Alternatives to filing bankruptcy

Bankruptcy may provide a fresh beginning for those trying to manage their debts, however this isn’t the sole method to end your debt. Consider your alternative debt repayment methods:

  • Talk to your lenders. If you’re having difficulties paying your mortgage contact your loan administrator to discuss options such as mortgage forbearance or modification to your loan. If you are owed IRS money you can sign up for an installment program or settle less than what you owe through an compromise offer (OIC).
  • Join a credit counseling program. A non-profit credit counselor can help you manage your debt with financial education. Credit counseling agencies will also assist you with registering as a member of a debt management program (DMP) and engage with creditor for you.
  • Consolidate credit card debt. It’s possible to obtain a lower cost for your debts from credit cards with an account transfer or credit consolidation. You’ll need credit score to be eligible for the most attractive deal on balance transfer credit cards rates and personal loans to consolidate debt.

You can go to Credible to review offers on balance transfer cards that are free or debt consolidation credit by taking a an informal credit survey to determine whether this debt management approach is suitable for you.

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