If you're considering filing bankruptcy as a way of escaping unmanageable debt or other financial burdens, you may be wondering what effects a bankruptcy filing will have on your finances in the long term. According to Maine's Morning Sentinel, a new study may offer some insight on that question.
The study, conducted by researchers from University of Maine's School of Law and Ohio State University, reportedly found that those who choose to seek bankruptcy protection do eventually "catch up" to their non-filing peers. Unfortunately, it seems that getting back on track often takes more than a decade.
In order to get an idea of how bankruptcy filers compare to non-filers, sources report that the study compared such characteristics as income, debt, important assets (home, car, etc.) and overall wealth. The breakdown of numbers may seem discouraging at first glance.
Evidently, the average person who files bankruptcy takes the following amounts of time to catch up financially with non-filing peers:
While these numbers may seem daunting, insiders apparently see them as a positive indicator rather than a negative - the fact that bankruptcy filers tend to recover at all should be seen as a good thing, the Morning Sentinel suggests.
After all, a "fresh financial start" means starting without any debts and without any savings. The director of the Institute for Financial Literacy is quoted in the Sentinel as saying that, without the protection offered by bankruptcy, struggling Americans likely wouldn't ever recover lost financial ground.
Knowing that a full financial recovery from bankruptcy can take more than two decades should serve as a wake-up call to those struggling with debt: while bankruptcy offers a fresh financial start, it's up to the individual to make the most of that gift.
While the debtor education course mandated by BAPCPA for all bankruptcy filers offers an introduction to healthy financial practices, everyday life offers numerous chances to veer onto the path of debt - even for the best-intentioned filers.
By actively pursuing financial literacy, you can help make sure you maximize the potential benefits of your bankruptcy fresh start.
Remember: you can get lots of valuable information online, but a bankruptcy attorney may be able to help you better with your specific case.
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