Life

Understanding Bankruptcy in the US: Causes, Types and Consequences

  Obama pointed out in his 2009 State of the Union address that every 30 seconds an American goes bankrupt due to medical expenses, and more than 1 million people go bankrupt every year.
What is it like to be bankrupt?

  If an American fails to pay the bill, the hospital may sell his bill to a third-party loan collection company, and the loan collection company harasses the person every day. This situation appeared in the American TV series “Basic Act”.
  When a person receives various threatening calls every day and is really unbearable but cannot pay the money, he can go to the court to apply for bankruptcy. There are two types of bankruptcy. One is “Chapter 7 bankruptcy.” That is, according to Chapter 7 of the Bankruptcy Law, except for student loans and child support expenses, everything else is directly exempted, but there is a prerequisite. , your income must be lower than the local median.
  Of course, when you file for bankruptcy, the person who lent you money must also be present. If people don’t agree with your bankruptcy, you have to go through bankruptcy procedures according to “Chapter 13 Bankruptcy”. In other words, if your income is not low, you cannot directly forgive the debt. After you file for bankruptcy, the person who lent you the money can no longer harass you, but you must promise to repay the money within a few years.
  Currently, 70% of those filing for bankruptcy in the United States are “Chapter 7 bankruptcies,” which means that most of them are low-income earners. After bankruptcy, all assets in this person’s name will be liquidated. Except for his pets, which will be left to him and the savings will be used to pay off debts, other houses, cars, etc. may be auctioned (of course, he may also be left with a house according to local state laws). ), the auction money is returned to the debtor.
  When you go to the United States, you often see homeless people setting up tents on the street, making the whole street a mess. Homeless people are not necessarily bankrupt, but bankrupt people do easily become homeless.
  After successfully filing for bankruptcy, you will encounter these troubles in the next seven years: limit high consumption, only maintain some basic living needs, and use the extra money you earn every year to pay off debts. I almost said goodbye to my credit life. I couldn’t get a loan or apply for a credit card. Most of my reputation has been ruined. Things like bankruptcy are not personal privacy and can be found online. Subsequent job hunting and renting will be affected.
  You may be wondering, after seven years of not paying back the money, you are living a normal life. Have you ever considered the feelings of the person who is owed money? I also had this kind of confusion, and later I asked a professional about it, and he said that Americans have two considerations: first, if the debt is not paid, you should not be beaten to death with a stick. If it is confirmed that the debt is not paid, it is okay to continue to force him It doesn’t make any sense. And because of the existence of this system, everyone will consider the risk of borrowing money. The United States values ​​”self-responsibility.” If you lend money to someone who may not be able to repay it, you must reflect on your own problems. Americans rarely lend money to each other.
  Secondly, and most importantly, there is very little room for ordinary people to maneuver when it comes to bankruptcy. If you apply for bankruptcy, you will often be unable to survive.
  For those rich, bankruptcy is another matter – rich Americans will break their property into pieces, which function like the isolation warehouse of a cruise ship. If one piece bursts, it will not affect the others. The bankruptcy system is a tool for some people to protect their property. For them, the bankruptcy system is almost a legal loophole.
  The bankruptcy system plus the foundation system is simply a wonder in the history of human law – you “donate” all the money in your name to a foundation that does not belong to you, and then one day you go bankrupt, and you still You can continue to use the money from the foundation to make ends meet. The fund is your piggy bank.
consumer bankruptcy

  Almost all families in the United States are overdrafted every month. Not only are they overdrafted every month, but they also consume in advance. As soon as the monthly salary is paid, almost all of the various bills are paid off, and this month they use credit cards to live.
  In 2016, Linda wrote an article mentioning a basic fact in American society: nearly two-thirds of Americans cannot afford $1,000 for an emergency. To this end, I actually asked a few Americans, and they told me that they did not have $1,000, and neither did the people around me – most families did not have $1,000 either. But this has nothing to do with income level.
  I asked them why they maintain such a unique view on consumption. A Chinese-American said that Americans have lived in peace for a long time and have not experienced many hardships, so they are naturally very optimistic about the future.
  Of course, using a credit card is not a problem, the problem is the installment.
  An American professor said on a video website that the root cause of Americans’ financial pain is poor mathematics and their inability to calculate the interest rates on credit card installments. He also praised the Chinese, saying that the Chinese are good at mathematics and can do calculations clearly, so the Chinese do not like to use credit card installments. In fact, this is a misunderstanding of us. First of all, Chinese young people are indeed not very interested in credit cards, but young people use Huabei a lot; secondly, I have never seen many people who can figure out the installment interest rate, because the algorithm is very complicated.
  The vast majority of the American people swipe their cards whenever they disagree. After finishing the payment, I remembered that I might not be able to pay this month’s bill next month, so I divided it into installments and prepared to pay it back slowly. One installment may not be obvious, but it will be different if there are too many of them. Gradually, you will be unable to make ends meet. Anyway, your monthly salary is paid back to the bank, and you can only rely on credit cards to survive. If you buy something big, you need to pay it in installments. After that, you will have even less money, and you will get deeper and deeper into the situation.
  If a person is not unemployed, there will generally be no problem if he is nervous every month, but once he becomes unemployed, he will be in big trouble. During the U.S. economic crisis in 2008, millions of American families filed for bankruptcy overnight. This was often caused by their inability to pay off credit cards – many people owed a large amount of money, their cash flow was disrupted, and they soon became unable to bear the debt.
  We mentioned above that creditors will be present when you file for bankruptcy, and if they do not agree, you cannot discharge the debt. But credit card companies generally agree, because they have already factored in this default rate when issuing cards. Such high interest rates inherently leave room for default.
  In addition to medical care and credit card overdrafts, mortgage and student loans are also important causes of bankruptcy for Americans. Home loans are easy to understand, but student loans leading to bankruptcy are something we can’t seem to understand. If you meet Americans, you will find that their student loans are much larger than ours. You know, China’s education should be the cheapest in the world.

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