Bankruptcy is usually associated with a failed business or company, but personal bankruptcies are far more common, and they’re climbing fast. Filings were up almost 12% year-over-year by the end of March, part of a nearly 50% surge over the past three years, NPR reports.
But researchers say bankruptcy isn’t the disaster people assume. It stops creditor harassment immediately, and most people’s credit scores recover within a year, often improving from there. “People don’t understand how good of a deal bankruptcy is,” said Samuel Antill, a Harvard Business School professor.
While it’s tempting to assume the rise in bankruptcies is an indicator of the struggling economy, experts say it’s more complicated than that. Filings are still lower than they were before the pandemic, and most people don’t file the moment they hit financial trouble. It usually takes years of struggling badly first.
Bankruptcy is usually associated with a failed business or company, but personal bankruptcies are far more common, and they’re climbing fast. Filings were up almost 12% year-over-year by the end of March, part of a nearly 50% surge over the past three years, NPR reports.
But researchers say bankruptcy isn’t the disaster people assume. It stops creditor harassment immediately, and most people’s credit scores recover within a year, often improving from there. “People don’t understand how good of a deal bankruptcy is,” said Samuel Antill, a Harvard Business School professor.
While it’s tempting to assume the rise in bankruptcies is an indicator of the struggling economy, experts say it’s more complicated than that. Filings are still lower than they were before the pandemic, and most people don’t file the moment they hit financial trouble. It usually takes years of struggling badly first.