Unexpected disasters could be cause for personal bankruptcy
The recent mudslide in Washington state that killed more than two dozen people and injured many more will have a big impact for years to come. Many families lost loved ones, not to mention many treasured possessions, and dozens homes and vehicles were destroyed. The mudslide was tragic for many on a personal level, and the financial heartache that many people are experiencing makes it all the worse.
Many people who lost their homes may not have been insured. In fact, government agencies determined that 30 of the homes that were destroyed did not have landslide insurance. In addition, most of them belonged to low-income families.
s One small community bank has said that it will forgive any uninsured debts that are owed by its customers who were affected by the mudslide, but it’s not clear how many people that might be. Larger banks have said that they’re willing to help, but stopped short of offering to forgive debts entirely.
For some people, personal bankruptcy in the form of Chapter 13 or Chapter 7 protection might be the best way to go. Many of the folks who survived the disaster may have limited assets, and with their homes and cars gone, they might have few options. Credit card debts could swell quickly for people who need to replace items that were lost — and who might not be thinking about the long-term impact of such spending. People who face a situation that changes their lives overnight might want to consult with a bankruptcy attorney, who can advise them on a course of action.
Source: The Seattle Times, “Slide erased their homes, but maybe not their loans,” Sanjay Bhatt, April 1, 2014