Many people use the word literally incorrectly (it's a pet peeve of mine). Literally means truly, honestly, actually. As in, my eyes literally popped out of my head would mean my optical orbs physically sprang from their spot on my face. Needless to say, it's not a word to use lightly. But now, a new study shows quantitatively that filing bankruptcy can
literally save your life. Research from Harvard University and the Social Security Administration examined Chapter 13 filings and the real-life effects bankruptcy had on filers lives and the findings are incredible. Here's what the study titled Debt Relief and Debtor Outcomes: Measuring the Effects of Consumer Bankruptcy Protection found and how this debt relief option can keep you living longer.
#1 Filing Chapter 13 Increases Earnings
If you're behind on your debts, you may be subject to garnishment (this is more rare in North Carolina) and harassed by bill collectors. This can be a disincentive to full employment. Because filing Chapter 13 can decrease garnishment and debt collections efforts, you are more likely to work harder, work additional hours and put more effort into earning a living. The research showed that in the five years after bankruptcy, Chapter 13 filers increased annual income by around $5,000 – a more than 21% increase in pre-filing wages. For those earning a higher income pre-filing, the income increase is even greater.
#2 Filing Chapter 13 Reduces Unemployment
Again, because being neck deep in debt may leave you with a disinclination to working at your max, Chapter 13 relief may be the rebound you need. Post-filing, those who seek Chapter 13 protection see a 3.5% increase in employment during the first five years after filing and even higher odds of employment in the sixth through tenth years after filing. Simply, reduction of debt and getting debt under control is a major encouragement to seek out and keep a job. Also interesting is that odds of self-employment increase nearly 3% post-filing. An effective debt relief program may be the incentive to get those moving who always wanted to be their own boss. For those in higher income brackets pre-filing, the increased odds of employment are also greater.
#3 Filing Chapter 13 Increases Longevity of Life
Money problems can feel so bad that you may think you want to die and, while this isn't a literal statement, the fact is that financial stress can take years away from your life. Stress can increase mortality rates by 50% and financial concerns are what 75% of consumers say are their most significant stress sources. Two years after filing Chapter 13, mortality risk is decreased by 1.6% and at the five year point, by more than nearly 2%. At the ten year post-filing mark, the mortality risk reduction is at nearly 6%. For those aged 60 and older, the reduction in mortality rates is nearly 18% - this is an incredible result. Also, improvement in mortality rates are higher when foreclosure is stopped by the Chapter 13.
The bottom line is that while considering bankruptcy may itself be a source of stress, it shouldn't be. These verified statistical outcomes show that opting for Chapter 13 is much better than continuing to wallow in unmanageable debt. The study authors, Will Dobbie and Jae Song, contribute the improved outcomes to two main factors: protection from garnishment and protection from financial instability.
While North Carolina consumers aren't generally able to be garnished for most debts, it can still happen for income taxes, support payments and student loans. Filing Chapter 13 allows you time to catch up on these debts and put an end to garnishment. And when it comes to stability, Chapter 13 gets your debts under control, offers a stable monthly payment plan, ends debt collection measures and gives you a specific timeline of three to five years of payments and a writeoff of remaining balances of most unsecured debts on that date. This certainty is reassuring.