In Maryland and across the United States, people experiencing heavy debt may want to file for Chapter 7 bankruptcy. Chapter 7 and Chapter 13 offer two types of bankruptcy for people facing serious financial challenges. A person who files Chapter 7 bankruptcy liquidates all unsecured debts, which means that the debtor no longer owes money to their creditors.
Overwhelming debt is a common problem for Maryland residents. Those who are facing this issue might function under negative preconceived notions about bankruptcy. For many, bankruptcy is a useful strategy for moving forward without being weighed down by immense debt. Some individuals who have filed for Chapter 7 bankruptcy tout the process as one of the smartest things they have ever done.
Young people in Maryland and elsewhere around the country are having difficulties keeping up with their credit card bills, according to a recent New York Federal Reserve report. The central bank's Quarterly Report on Household Debt and Credit for the first quarter of 2019 reveals that almost 1 in 10 millennial and generation Z borrowers have not made credit card payments for 90 days or more. This is the highest delinquency rate among young borrowers in eight years.
It is a difficult process to get student loan debts discharged in a Maryland bankruptcy. However, the process may be easier if the Student Borrower Bankruptcy Relief Act of 2019 were to become law. By 2022, student loan debt in the United States is expected to be more than $2 trillion. There are doubts as to whether the entire balance would ever be repaid as roughly 25 percent of borrowers have missed payments or are in default.
Some Maryland residents dealing with debt lose all the money in their retirement plans, including their 401(k) accounts. However, using retirement savings to pay off debts is often a financial mistake. According to bankruptcy regulations, creditors are not allowed to touch the money invested in 401(k) plans. However, many debtors faced with serious financial obligations do use their 401(k) investments to pay down their debts.
Even seemingly successful individuals can suddenly find themselves struggling with debt. Back in 2007, many successful investors experienced a reversal of their fortunes. Because such individuals had to borrow so much money, many of them could no longer afford to pay their debts.