The benefit of Chapter 7 bankruptcy during the Great Recession

Many Americans, including those from Long Island, New York, have been struggling with their personal finances since the Great Recession. The Great Recession began in 2009 and many people are still dealing with financial challenges due to unemployment, debts and the high prices of commodities.

New York readers may relate to the story of a woman who has had her own experience during the Great Recession. The 35-year-old woman is one of those people who maintains a weekly budget to calculate her total savings and expenses. Her biggest goal is to live her life free of personal debt since she has been facing overwhelming debt for years.

According to sources, the woman started to work as a home loan officer in 2006. Subsequently, she was diagnosed with a rare blood disorder and her business, savings and credit cards helped her pay her numerous hospital visits.

However, when 2008 began, everything went downhill: she was hospitalized, lost her job, had her care repossessed and faced foreclosure on her home. She also accumulated credit card debts and unpaid medical bills due to her illness.

However, the woman filed for personal bankruptcy in 2009 so that she could start over.

The Great Recession is a time when many people choose personal bankruptcy. Personal bankruptcy, such as Chapter 7 bankruptcy, often has negative implications for debtors. That may be understandable but filing for bankruptcy may also allow an individual to have a fresh financial start.

In New York, personal debt can be discharged through Chapter 7 bankruptcy or, as it is also known, liquidation bankruptcy. In Chapter 7, the assets of the debtor are sold and the proceeds are used to repay the debts. While Chapter 7 may have a negative impact on a debtor sometimes, debt relief may only take three to six months to resolve, permitting the person to begin a debt-free life relatively quickly.

Source: Fox Business, “4 Personal Stories of the Great Recession,” Janna Herron, Sept. 30, 2013