For many people in Alabama, financial challenges are a persistent concern. With the last few years showing how quickly life can change with unexpected health issues, economic downturns and various upheavals, many Alabamans were confronted with the reality of unexpected and overwhelming bills they were unable to pay.
Researchers have assessed the frequency of bankruptcy filings and found that Alabama led the nation in bankruptcy filings per capita. While some might view this as a negative, it is important to remember the positives that can be achieved through bankruptcy.
Understanding the numbers and reasons for recent bankruptcy filings
Overall, the number of people filing for bankruptcy fell. There were more than 1.5 million personal bankruptcy filings in 2010. In the next decade, that number was shaved nearly in half with slightly more than 750,000 filings. In 2020 and 2021, it reduced further. In 2022, people are increasingly facing obstacles in making their payments for household debt.
The statistics also show that a vast number of the filings were Chapter 7 liquidations. With Chapter 7, people will surrender property that still has value to be sold with the proceeds repaid to creditors. Unsecured debt like medical expenses and credit card bills will be cleared. Most people do not have substantial assets and retain much of their property. This differs from Chapter 13 where there is a payment plan and it lasts for three or five years. With Chapter 13, people can retain a home, automobiles and other items while eventually getting rid of their outstanding debt.
Alabama residents facing debt should know the facts about bankruptcy
The researchers found that Alabama topped the list for bankruptcy filings when adjusted based on population. In 2021, for every million people in the state, there were 3,053 bankruptcies. Of those, 3,021 were non-business bankruptcies.
As this shows, being in heavy debt is not unusual. People who harbor negative beliefs about bankruptcy should get information that will show them the facts. Not only can it help financially, but it can help mentally and emotionally as well. Consulting with professionals about the details of a filing can be informative and soothing. This is the first step toward getting into a better financial situation and moving forward.
