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Personal and Business Bankruptcy: Chapter 7, Chapter 11, Chapter 13

When Debts and Financial Stress Threaten Health, Bankruptcy May Be in Order

Many people who desperately need the financial break that bankruptcy can offer refuse to consider it as a solution. Most often this is because of the centuries-old stigma that is associated with bankruptcy. This stigma arose through a misunderstanding of the long-term detriments and harm which avoiding bankruptcy could impose upon a good faith individual with excessive debts. However, bankruptcy can be a valuable relief valve for some people whose financial crisis is beyond their control, and now evidence is showing that financial and debt stress is taking a huge toll on people’s health.

A couple years ago, the Associated Press and AOL conducted a huge survey to examine the effects of debt stress on people’s health. The survey results suggested a strong connection between high debt stress and increased likelihood of health problems. According to the results, people with high debt stress were:

  • Twice as likely to suffer a heart attack
  • Over 3 times as likely to experience ulcers and digestive problems
  • 6 times as likely to be depressed
  • 11 times as likely to suffer headaches and migraines

Muscle tension and lower back pain also figured prominently among survey respondents with high debt stress.

Why Financial & Debt Stress Damage Health

Situations of stress, whether the stress is caused by debts or financial problems or anything else, trigger the body’s fight-or-flight response so that adrenaline and cortisol are released. These hormones are supposed to prepare the body for action. But when the stress is chronic or prolonged, as it usually is in the case of financial stress, the heightened levels of these hormones damages the body. High blood pressure and heart rate, poor memory and suppressed immune functions are common in people experiencing prolonged stress. Stated otherwise, debt can kill you.

When people suffer stress due to financial troubles or overwhelming debt issues, often caused by reduced or loss of income or unexpected increase in expenses, they experience feelings of anxiety, being out of control, depression and other forms of mental and emotional distress. Decreased job performance and increased absenteeism can also result from financial stress.

How Bankruptcy can Help

When overwhelming debts and/or extensive past due payments are the source of financial stress, bankruptcy can help a person get back in control of their finances and make the financial picture more manageable.

Chapter 7 bankruptcy can eliminates all unsecured debts, like credit cards and medical bills, except a few non-dischargeable debts such as child support obligations and tax debts. However, in Chapter 7 bankruptcy, all a person’s property except that exempted by law will be sold to pay as many of the debtor’s creditors as possible. Secured debts, like mortgages or car loans, may be foreclosed on or reposed if the debtor does not have enough income to afford them after the discharge. The goal of Chapter 7 bankruptcy is to give the debtor a fresh start by bringing his or her monthly expenses below their monthly income amount.

Chapter 13 bankruptcy puts the debtor on a manageable repayment plan that reduces his/her expenses below their income. The repayment plan must be paid on faithfully for up to five years. After completion of the plan, all the remaining debts that would be eligible for discharge in Chapter 7 bankruptcy are then discharged.

Both forms of bankruptcy require all creditors to cease collection efforts (known as the automatic stay) until the bankruptcy process is complete (including the repayment plan duration for Chapter 13 bankruptcies) or the bankruptcy judge lifts the stay. This gives the debtor breathing room and peace of mind so they can think clearly and make good decisions during the bankruptcy process.

Most importantly, relieving yourself from debts through bankruptcy stops the pain, anxiety and lack of self confidence that this silent killer can cause. Stated otherwise, obtaining debt relief can make you feel like yourself.

Is bankruptcy right for your situation?

Bankruptcy is not the right solution for every financial crisis. The best way to determine whether bankruptcy can help with your financial and debt issues is to speak with an experienced bankruptcy attorney. In Maryland bankruptcy attorney John D. Burns and his firm can help you find the best solution, whether it be bankruptcy or another debt solution, so you can end financial stress and avoid the increased health risks that accompany it. Call our office at 301-441-8780 to schedule an appointment or e-mail us at jburns@burnsbankruptcyfirm.com.

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