While New York residents may run up debt in a number of different ways, including home, automobile and student loans, but credit card debt is still the most common reason people file for bankruptcy. According to a recent survey, nearly one-third of the respondents cited credit card debt as their reason for filing, with the next two most common reasons being home foreclosures and job losses. The survey also found that a large majority of consumers had filed for bankruptcy under Chapter 7 compared to Chapter 13.
While people commonly filed for bankruptcy for various reasons, approximately 20 percent of the respondents were concerned about the impact on their credit rating. It is important to note that while a bankruptcy will put a mark on someone’s credit report, people are now able to start rebuilding their credit almost immediately after filing.
With the increase in popularity of prepaid and secured credit cards, consumers can quickly begin developing a payment history that helps to boost their credit score. In some cases, many individuals are able to successfully obtain new credit within a few years of filing for bankruptcy.
There are a variety of benefits to filing for bankruptcy, and it can be an effective method of debt relief. There are also some significant differences between the forms of bankruptcy that are available for individuals, in terms of the types of debts that can be discharged as well as the length of the proceedings. A bankruptcy attorney may be able to help determine what type of filing would be more advisable for a particular client by assessing the individual’s assets and liabilities, projected cash flow and other variables.
Source: Main Street, “The kind of debt can lead to bankruptcy“, Juliette Fairley, December 12, 2013by