Nicole Havens
Mrs. Scherer
English 9R/10R
14 Nov. 2012
The Big Bill

Filing for bankruptcy is a way for people who are in over their heads with debt can have a fresh start with their credit history. Bankruptcy is the only way for many insolvent debtors to get a clean slate. The definition of bankruptcy is any insolvent debtor; a person unable to satisfy any just claims made upon him or her (dictionary.com). In 2009 a record 3000,000,000 people had filed for bankruptcy that year, which is about 1 in 70 households (thebankruptcylawyer.com). When filing for bankruptcy, debtors can file themselves or creditors can ask the court to order someone bankrupt. Bankruptcy affects society by adding to national debt, ruining credit scores, and adding extra stress to family life. The bankruptcy process was originally supposed to help the economy, it encourages borrowing and spending as well as risk for businesses (Nicholson, ehow). Over the years bankruptcy has added to national debt, which currently stands at $16 trillion. Many people file for bankruptcy in desperation to save their credit scores and get out of debt, while the larger economy will end up suffering from the bankruptcy bill (Alter, 45). While most is from borrowing and spending money from other countries, small consumer and business bankruptcies have added to this astonishing number of debt. Bankruptcy filings have doubled to more than 1.6 million in the past couple years (Alter, 45). Some blame the economy, while many experts say it’s the lack of budgeting that sends family’s over the edge in debt. Not only are consumer and business credit scores at risk, the whole countries credit rating is a teetering risk. Filing for different chapters can save the credit history, but there is no promise that it will not decrease your credit score. In most cases, filing for bankruptcy can decrease someone’s credit score by as much as 300 points (Polyak, 107). Many have to take a test to file for bankruptcy to be sure they qualify, and can pay back the minimum that will be charged (Jet, 23-25). There are different types of bankruptcy to file for, such as chapter 7, 9, 11, 12, 13, and 15. Chapter 7 takes about 4 months and is the same thing as liquidation. Chapter 13 only requires you pay a reduced amount of your debts over a certain amount of time usually about 5 years (Polyak, 107-109). Chapter 11 is for businesses in debt and helps them start a clean slate and get rid of their liabilities (Shell, 44-63). Business bankruptcy can sometimes save the company, while consumer bankruptcy only has negative effects. Bankruptcy helps people get out of debt and have a clean slate, but it takes about 10 years to rebuild credit history and get back to a solvent state. Debts and bankruptcy take a large toll on family and home life. 80% of divorces are due to debt and bankruptcy (Read, News-Herald). Budgeting in most solvent homes is a big part of a family especially if two incomes are shared. Families in debt face the fear of someday possibly losing their homes or cars. The added stresses of debts are what send some couples into divorce. Some say they only stay together because the cost of splitting up would be too expensive. Attorney and counseling fees usually range from $700-$1,000 (Polyak, 107-109). Some families cannot afford bankruptcy, so therefore are forced to deal with overwhelming bill collectors and paying back the debt at full. If one person in the relationship is insolvent, they can file bankruptcy alone and it would only affect their credit, but it would still put distress on the whole family. The longer you wait the more and more your debt builds up and interest payments get higher. On the other hand, families who do file for bankruptcy have to deal with the stress of getting back on their feet afterwards. Creating a budget and saving your money is the best way to avoid bankruptcy as well as get back to a solvent state after filing. Rebuilding a