Bankruptcy: Frightening Reality Essay -- essays research papers

Since the 1960s, private bankruptcy has often served as a refuge for the young and struggling. Bankruptcy lawyers say younger and less-educated community tended to rack up too much debt while starting families and jobs, without a savings cushion to carry them through lean times. Thats changing, as personal bankruptcy filings hit all-time highs. Last year, there were more than 1.6 zillion such filings, nearly twice as many as a decade earlier. Some experts say much of the increase is being compulsive by older people, many with decades of work experience in skilled jobs. In 2001, per capita filings by people ages 45 to 54 increased 58% from a decade earlier, according to one study. Bankruptcy is a licit proceeding that allows a person who is overwhelmed with debts to eventually become debt-free. In a typical personal-bankruptcy case, credit-card balances and other "unsecured" debts-which are not backed by any collateral-are wiped out entirely. Under court supervision, th e debtor then negotiates a plan with creditors to pay off as much of the remaining debt as possible, over three to five years. During that time, debtors cannot take on any upstart debts, but they are protected by the courts from being sued by creditors or having their assets repossessed. Credit reports list bankruptcy filings for seven to 10 years, making it nearly impossible for a filer to get new loans or credit. scarcely once that period is over, the debtor can move on with a clean credit record, free of de...