Bankruptcy is a relatively common financial occurrence in the United States. It’s estimated that about 500,000 to 700,000 people and entities file for bankruptcy yearly.
Chapter 7 bankruptcy is the most common type, accounting for about 70% of all filings. In Chapter 7, also known as a “straight bankruptcy,” the debtor’s assets are liquidated and used to pay creditors. Any remaining debt is then discharged.
Chapter 13 bankruptcy, also called a “reorganization” or “wage earner’s plan,” involves reorganizing the debtor’s finances and the repayment of creditors over time. Under this type of bankruptcy, the court approves a repayment plan allowing the debtor to use their future income to repay creditors in whole or part.
While bankruptcy can be a difficult and stressful process, it can also provide much-needed relief for those needing it, especially businesses. However, it’s safe to say that you still need to avoid this option.
The Problem With Bankruptcy
Bankruptcy is often seen as a last resort for those in financial trouble. And while it can be helpful in some situations, it’s not always the best option.
For one, bankruptcy can be very costly. For example, the filing fee for a Chapter 7 bankruptcy is $335, and the cost for a Chapter 13 bankruptcy is $310. But that’s just the start. You’ll also need to pay an attorney to help you through the process, which can cost anywhere from $1,500 to $4,000 or more.
Additionally, bankruptcy will stay on your credit report for seven to 10 years, making it difficult to get approved for loans or credit cards. And even after the bankruptcy has been removed from your report, your credit score will likely be lower, making it difficult to get the best interest rates.
Finally, bankruptcy is a public record, meaning that anyone who looks at your credit report will be able to see that you’ve filed for bankruptcy. This can make it challenging to get approved for housing or a job, as potential landlords and employers may view you as a high-risk applicant.
So, while bankruptcy can provide some relief in the short term, it’s essential to consider the long-term effects before deciding to file.
There are various reasons why bankruptcy happens in the United States. But one of the most prevailing reasons is divorce.
Divorce and Bankruptcy
Divorce can be a difficult and stressful process, both emotionally and financially. And while it’s often seen as the best option for those unhappy in their marriage, it can also lead to some serious financial problems.
The average cost of divorce is $7,500, making it one of the most significant issues that can arise from divorce is debt. When two people get divorced, they are each responsible for their debt. So, if one person has a lot of debt, the other person may be left with very little.
This can lead to financial problems, such as difficulty paying bills, trouble getting approved for loans or credit cards, and even bankruptcy. Avoiding divorce can be a hard thing to do, but avoiding the costs behind it is possible, especially if you want to save your business. Here are your options.
Reducing Child Custody Costs
One of the most significant financial burdens from divorce is child custody. If you have children, you’ll likely be responsible for paying child support, which can be a considerable expense.
You may want to consider joint custody to reduce the amount you have to pay in child support. Joint custody allows both parents to share the responsibility for their children, which can help to reduce the financial burden on both parties. You should also try to keep your parenting time as equal as possible. The more time you have with your children, the less, you’ll have to pay for child support.
There are various ways to let this happen, but getting help from a professional is the best option. A child custody lawyer can help you negotiate a fair custody arrangement that works for you and your ex-spouse. It makes sense if you both want to prevent the company from falling apart.
Another option for reducing the costs of divorce is mediation. Mediation is a process where both parties meet with a neutral third party to discuss their divorce. This third party can help facilitate discussion and negotiate an agreement between the two parties.
Mediation can be a great way to reduce the cost of divorce, as it can help avoid the need for expensive legal fees. Additionally, mediation can be quicker than court, saving you both time and money.
If you’re considering divorce, you should speak with a mediator to see if it’s right. Mediation can be an excellent option for those who want to save money on their divorce.
Divorce can be a difficult and stressful process, both emotionally and financially. Therefore, it’s essential to consider the long-term effects of divorce and consider the business before doing it.