Recent Study Shows that Filing Chapter 13 Increases Your Life Expectancy & Your Bank Account!
In a study* released last month by the National Bureau of Economic Research, two economists examined half a million bankruptcy filing in the U.S. to determine the effect of bankruptcy laws on consumers and their subsequent outcomes. The results they cited are powerful:
"½we find that Chapter 13 protection increases annual earnings by $5,562, decreases five-year mortality by 1.2 percentage points, and decreases five-year foreclosure rates by 19.1 percentage points."
Our firm has long promoted the unique benefits of filing for Chapter 13 protection. But until recently we have not had large scale facts, other than what we have witnessed with thousands of our clients over the years, as we saw their lives and finances improve through the process of legal debt consolidation and debt resolution. We recently posted a blog piece about new data that has become available on the merged credit reports we pull for our clients through CIN Legal Data. This tool projects a person's credit score 12 months post-bankruptcy. From cases we have filed since this new information has become available, the average credit score increase was 11% or 70 points! This new study just further solidifies what we have always known, Chapter 13 is one of the most effective tools for resolving debt, protecting property and improving your credit. If you are considering Chapter 13 protection or perhaps just looking to consolidate your debts, you owe it to yourself to investigate the many advantages of a reorganization plan. Our firm offers a free consultation to help you evaluate your options and answer your questions. Call us today at 866-261-8282 to speak to a licensed attorney or schedule an appointment online at any of our five Michigan offices in: Ann Arbor, Southfield, Warren, Flint or Dearborn. Breaking down each aspect of the economists' finding, here is why they concluded that bankruptcy is "one of the largest social insurance programs in the United States:"
Chapter 13 Provides Incentive To Increase Earning
Nothing works against productivity like taking away the incentive to work - your paycheck! The study cited that taking away the threat of adverse creditor action, such as a wage or bank account garnishment, can help previous bankruptcy filers to be more productive and earn more money. Since you leave the Chapter 13 program free of all unsecured debts and current on all secured debts, a pay increase can be used to improve your quality of life, not just trying to whittle away your debt.
Finding Lasting and Legal Debt Resolution with a Chapter 13 Reorganization Reduces Stress
Stress of any form is detrimental to your health. Lingering debt and creditor threats creates financial stress that can be far-reaching in your life. The study suggests that by achieving debt resolution, debtors reduce their stress and this has a positive effect on long-term health and life expectancy.
Foreclosures Decrease Because the Chapter 13 Plan Prevents Foreclosure and Prioritizes Repayment to Secured Creditors
Chapter 13 is designed specifically to allow homeowners to avoid foreclosure. By filing for this bankruptcy protection, you instantly stop a foreclosure sale from occurring and gain optimal repayment terms to get back on track with your mortgage. When you complete the program, you are brought current and in good standing with your mortgage lender. Plus you have a legal discharge from any remaining unsecured debt (such as credit cards, medical bills, personal loans, often second mortgages, etc). A Chapter 13 Reorganization allows you to provide room in your budget to cover necessities without distractions from miscellaneous debt that prevents you from remaining current on important items (your home and car). This study proves that Chapter 13 is an effective means to ward off future foreclosures.
Trust Our Experience
For over a decade, our firm has helped Michigan families find lasting debt resolution through Chapter 7, Chapter 13 bankruptcy and non-bankruptcy debt-settlement. Call us at 866-261-8282 for a personal consultation on your options for debt relief and evaluate firsthand if our expertise in bringing lasting financial peace. We look forward to earning your trust. *Study: Debt Relief and Debtor Outcomes: Measuring the Effects of Consumer Bankruptcy Protection by Will Dobbie and Jae Song; NBER Working Paper No. 20520 Issued in September 2014