There is nothing shameful about the bankruptcy process. Every year, thousands of people throughout Texas use bankruptcy to discharge their debts and start fresh. In fact, the number of people filing Chapter 7 is likely to increase significantly in the second half of 2020.
Chapter 7 bankruptcy, also called liquidation bankruptcy, allows debtors to discharge their unsecured debts by liquidating some of their assets. It is the most common form of bankruptcy, both in Texas and the United States. If industry predictions hold true, it will become even more common before the end of the year.
Why will the rate of Chapter 7 filings increase?
The recent economic downturn has wrought devastating financial hardship to people throughout the country. Texas is no exception. In times of a slowed economy, Chapter 7 bankruptcy rates tend to increase. However, this did not hold true for the first half of the year. In spring, the federal government issued $3 trillion in stimulus money to millions of Americans. As a result, bankruptcy filings in the past six months actually decreased 16% in Texas.
However, professionals in the financial industry predict that this trend will not hold steady. With the effects of the stimulus package waning, the number of Texans filing Chapter 7 will likely increase dramatically.
Understanding Chapter 7 in Texas
Chapter 7 is the most popular form of bankruptcy because it allows everyday people to regain control of their debt and start with a clean slate. Though many filers worry that they will lose their home, vehicles and other property, many assets do not face liquidation in Chapter 7.
Anyone considering filing Chapter 7 can contact a financial advisor or bankruptcy attorney to discuss their situation. Every case is unique, but debtors can rest assured that they are not alone in considering bankruptcy during this difficult economic climate.