Charlotte Bankruptcy Lawyer Bryan W. Stone of Arnold & Smith, PLLC answers the question “What is Chapter 13 bankruptcy?”
Exercise, eat less, don’t drink and don’t smoke. Get a good night’s sleep. These are the exhortations of countless self-help gurus whose stated goal is to help you live a better, healthier, longer life. Now add to their list: bankruptcy.
It’s true, a “working paper” released yesterday by the National Bureau of Economic Research shows that winning approval for a Chapter 13 bankruptcy “increases annual earnings by $5,562, decreases five-year mortality by 1.2 percent, and decreases five-year foreclosure rates by 19.1 percent.” Those findings are based on an examination of some 500,000 bankruptcy filings in the United States.
Economists Will Dobbie and Jae Song say their research shows that bankruptcy protection helps workers earn more by eliminating the primary disincentive to work: wage garnishment by creditors. Garnishing wages has the opposite effect; it can cause workers to quit working altogether. Chapter 13 bankruptcies are designed to allow people to avoid foreclosure, enabling them to stay in their homes, which greatly reduces stress. The reduction in stress—Dobbie and Song say—leads to a healthier lifestyle and, by extension, a longer life.
A Chapter 13 bankruptcy is known as “a wage earner’s plan.” The Chapter 13 bankruptcy allows individuals with a regular income stream to formulate a plan to repay all or part of their debts.
Song and Dobbie challenge the logic behind the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act. The goal of that act was to make it more difficult for people to file for bankruptcy. If it was too easy for people to file for bankruptcy, the thinking went, they would get away with not having to pay their debts, which would lead lenders to raise borrowing costs on everyone.
A 2009 study by the Bankruptcy Law Journal showed that the act did lower the number of bankruptcies filed. But the financial services industry raised the costs associated with borrowing anyway, leading to record profits for lenders even as the cost of consumer credit rose. Making it harder for people to file for bankruptcy, Song and Dobbie stress, did not lower borrowing costs and didn’t help anyone except companies in the financial sector.
They recommend easing the requirements for filing for bankruptcy. They also recommend letting debtors discharge student-loan debt, which would ease the financial pressure on lower and middle-class families. Song and Dobbie also say their research shows that helping so-called underwater borrowers modify their mortgages “could provide huge benefits for those people, and the economy overall.”
Underwater mortgages are those in which homeowners owe more to a mortgage lender than their property is worth, meaning that even if they sold their property for full value, they would still owe money to their lender.
If you find yourself needing the services of a Charlotte, North Carolina bankruptcy attorney, please call the skilled lawyers at Arnold & Smith, PLLC find additional resources here. As professionals who are experienced at handling all kinds of bankruptcy matters, our attorneys will provide you with the best advice for your particular situation.
About the Author
Bryan Stone is a Partner with Arnold & Smith, PLLC, where he focuses his practice on all aspects of bankruptcy, including: Chapter 7, Chapter 11, Chapter 13, home loan modifications and landlord-tenant issues.
A native of Macon, Georgia, Mr. Stone attended the University of Georgia, where he earned a BBA in Banking and Finance, and Wake Forest University School of Law, where he obtained his law degree.
Following law school, Mr. Stone relocated to Charlotte, where he currently serves as Chair of “Bravo!” – a young professionals organization associated with Opera Carolina – and founded the University of Georgia Alumni Association of Charlotte.
In his spare time, Mr. Stone enjoys perfecting his barbeque skills for the annual “Q-City BBQ Championship” and playing softball in the Mecklenburg County Bar softball league.
See Our Related Video from our YouTube channel:
See Our Related Blog Posts: