Bankruptcy occurs as a result of an individual or business’s inability to repay its outstanding debts. The process starts with the debtor filing a petition. The debtor’s assets are evaluated and repurposed to repay the outstanding debt. Contrary to popular belief, bankruptcy also affects the loved ones of the debtors, whether directly or indirectly. They go through the entire process with the individual, providing support and living with the consequences. Are you contemplating filing for bankruptcy? Here are four ways bankruptcy can affect your family.
1. It negatively impacts mental health.
Bankruptcy is one of the most stressful situations. It causes anxiety, which ultimately affects your mental health. What’s more, your family gets to experience the social stigma associated with filing for bankruptcy. In times like this, most people prefer to keep to themselves. This often leads to depression or any other mental health disorder.
If any family member is experiencing feelings of depression, think about enrolling the person in an intensive outpatient program (IOP). An IOP program helps patients acquire healthy coping skills to deal with any mental illness. Mental health professionals usually recommend intensive outpatient therapy for depression, and you can access outpatient programs from the safety and comfort of your home.
IOP is an all-in-one treatment plan that includes individual therapy, family therapy, and group therapy. Today, many IOP providers assign their treatment sessions to master-level clinicians. There’s no one-size-fits-all treatment plan. While some patients may require three-hour sessions of individual therapy, many others may only need an hour. The bottom line is to opt for a treatment plan according to your individual needs.
2. It affects inheritances.
The primary goal of bankruptcy is to save you from creditor harassment and adversary proceedings. Plus, it helps with debt reorganization. However, filing for bankruptcy puts you at risk of losing valuable assets, which affects the inheritances of your family members.
Once you’ve made up your mind to file for bankruptcy, the next step is to consult an experienced bankruptcy attorney. While you have the right to file without an attorney, leveraging the expertise of a qualified person can help mitigate adverse financial and legal outcomes in the future. Without a proper understanding of bankruptcy law, you’re likely to experience difficulty pursuing your case.
Luckily, technology has simplified the process of finding a reputable bankruptcy attorney. For example, if you live in Birmingham, Google “bankruptcy attorney Birmingham, AL” to find reputable bankruptcy attorneys within that locality. Pick a bankruptcy law firm that doubles as a debt relief agency. That way, they can help create a plan for repaying recurring bills like medical bills and student loans.
3. It causes several lifestyle changes.
Bankruptcy causes significant lifestyle changes. For this reason, you’ll need to make a budget and determine your monthly spending. While creating a budget is the quickest way to curtail your spending habits, it can affect the lifestyle that your family members are used to enjoying. This could mean moving to a smaller house, driving a less expensive car, withdrawing your kids from a private school, selling the family yacht, or skipping annual family vacations.
4. It can affect spouse assets.
Filing personal bankruptcy doesn’t necessarily exempt your spouse from the consequences. A trustee’s job is to measure and evaluate the debtor’s properties for the discharge of debts. Keep in mind that common property laws dictate that properties acquired during the marriage are equally owned by both parties regardless of whose name is on the title.
Similarly, if you own properties jointly with your partner, those properties can become part of the bankruptcy estate. The bankruptcy trustee can make requisitions and sell them off to repay the creditors. However, if your spouse owns property in their name and doesn’t file for bankruptcy, the property won’t be included as part of the estate.