Getting Your Family Back On Track After Bankruptcy

Written By Jennifer Pell

There were 773,375 bankruptcy claims filed in 2018, according to the 2018 Year-End Report on the Federal Judiciary. Compared to the previous year, this was a 2% drop for consumer bankruptcies and a 4% drop for business ones. However, with personal debt in the U.S. recently topping $13.5 trillion, it looks like these figures will rise in 2019. When bankruptcy strikes a family, it can cause stress and pressure among individuals. It’s also common for marriages to break down in the midst of a bankruptcy. But, with the right legal support, it’s possible to rebuild your family setup and get back on your feet.

Utilize meditation

When you file for bankruptcy, every asset you own comes under scrutiny and this can disgruntle the family set up. It, therefore, comes as little surprise that a Ramsey Solutions survey found that money problems are the second most common reason why couples divorce. Thankfully, attending mediation is an effective way for all parties to voice how they’re feeling in an impartial environment. In 2016, the American Bankruptcy Institute’s Annual Spring Meeting highlighted how mediation has an important role in bankruptcy cases and that the list of disputes it can resolve is “endless”.

Get your finances back on track

One of the most common types of insolvency is Chapter 7 bankruptcy. In a Chapter 7 bankruptcy case your dischargeable debt will be erased. However, you will still be obliged to pay any debts which relate to domestic support. Where this is the case, the non-filing spouse is likely to be concerned about how the other spouse’s bankruptcy will impact their financial status, including their credit score. Thankfully in Chapter 7 cases, the non-filing partner’s finances will not be impacted, so long as joint debts are paid off on time. It’s, therefore, crucial that you go through every payment you each have, double check who’s name is on the debt and arrange for them to be paid off swiftly. By reviewing your family’s budget, making sacrifices, and putting any spare change you have into a savings account, you’ll rebuild your finances and your family in no time.

Make sure your family are covered

A study conducted by Harvard found that 62.1% of bankruptcies are due to medical fees. And while you might think having medical insurance in place will protect you from medical bankruptcy, statistics state otherwise. Individuals with medical insurance are three times more likely to file a bankruptcy claim, according to The Balance. This often occurs when insurers throw a claim out. Where this is the case, it’s worth seeking legal advice so that a review can be carried out to determine which party is in the right. However, other problems occur when families wrongly believe that they don’t need to have any cash saved for their medical bills. But, mandatory deductibles, which currently average $1,491, must be paid before an insurer will pay out. As such, when you’re rebuilding your family post-bankruptcy, it’s essential that you have medical insurance and your policy’s deductible ready and waiting to be used should another medical emergency strike.

Bankruptcy can happen to anyone at any time. But, you needn’t let it impact your family in the long-term. By working with a bankruptcy attorney and a mediator, you’ll be able to repair the damage that bankruptcy has done to your family and get back on your feet.