Why Are More Millenials Seeking Debt Relief Through Bankruptcy?

TRI Writer • March 12, 2020

You may not be aware that the number of millennials filing for bankruptcy is growing at a significant rate. This particular generation was born and raised during a very prosperous period (1980-2000). Still, many now find themselves drowning in debt with no particularly viable method of digging their way out on their own.

Why Are So Many Millenials Buried in Debt?

Older generations regularly toss around jokes about “millennials.” People falling into this generational definition tend to be the butt of jokes about poor lifestyle choices, being outrageously spoiled, and simply choosing not to grow up as they age. Due to these stereotypes, many upon hearing that the number of millennials declaring bankruptcy is on the rise will immediately scoff and blame their poor lifestyle choices, spoiled nature, irresponsible actions, etc. However, the truth is that many millennials that are buried in debt can easily trace their path down the road to financial struggle back to the rippling effect of student loan debt.

The student loan debt held by millennials is significantly larger than the typical student loan debt held by older generations. Additionally, most millennials entered the workforce after the Great Recession hit. At the time they were leaving school and looking for a “grown-up” job, the jobs offering a livable wage proportionate to the millennial’s education (and student loan debt balance) were rare.

Many quickly found themselves facing the harsh reality of living paycheck to paycheck, having no money left over to put into savings, and learning how easy it is to obtain credit cards. More than 50% of millennials who hold student loan debt are anxious about their inability to pay the debt. Many turned to credit cards (usually with high-interest rates), auto title loans, payday loans, or rent-to-own financing to make ends meet.

How Can Bankruptcy Help Millenials with Overwhelming Student Loan Debt?

Bankruptcy cannot wipe out federal student loan debt, but bankruptcy can wipe out credit card debt and other loan debt. Consumer debt can be discharged outright when filing Chapter 7 bankruptcy and managed through Chapter 13 bankruptcy. By effectively relieving millennials of their “other” debt, bankruptcy can give them a hand up out of impossible financial situations.

Are You Overwhelmed by Student Loan Debt?

If you are buried in student loan debt and need to discuss how filing for bankruptcy could change your situation, we can help. Trust the experienced Tennessee and Georgia bankruptcy attorneys at Kenneth C. Rannick P.C. We help good people through bad times every day, and we can help you, too.

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Subchapter 5 Bankruptcy: Unlocking New Possibilities for Tennessee Residents

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Are you a Tennessee resident facing financial challenges and considering bankruptcy? If so, you may have heard about a relatively new option called Subchapter 5 bankruptcy. But what exactly is Subchapter 5 and how does it differ from traditional Chapter 11 bankruptcy? More importantly, what benefits does it offer to individuals and small businesses?  In this blog post, we will explore the world of Subchapter 5 bankruptcy and shed light on its advantages for Tennessee residents. Whether you're a struggling entrepreneur or an individual burdened by overwhelming debt, understanding the potential benefits of Subchapter 5 can help you make informed decisions about your financial future. What is Subchapter 5 Bankruptcy? Subchapter 5 is a relatively recent addition to the United States Bankruptcy Code, specifically designed to provide a streamlined and cost-effective bankruptcy process for small businesses and individuals. It was created as part of the Small Business Reorganization Act (SBRA) in 2019, with the aim of increasing accessibility to Chapter 11 bankruptcy relief. The Benefits of Subchapter 5 Bankruptcy Simplified Process: One of the key advantages of Subchapter 5 is its simplified and faster bankruptcy process. Unlike traditional Chapter 11 bankruptcy, which can be complex and costly, Subchapter 5 offers a more streamlined approach that is better suited for small businesses and individuals. Retention of Ownership: Under Subchapter 5, business owners have the opportunity to retain ownership and control of their company while developing a repayment plan. This allows for greater flexibility and the ability to restructure debts without losing ownership interests. Reduced Plan Requirements: Subchapter 5 eliminates certain stringent plan requirements that are typically associated with traditional Chapter 11 bankruptcy. This simplification of the plan process makes it more accessible to small businesses and individuals. Debt Repayment Plan: Subchapter 5 allows for the development of a debt repayment plan based on the individual's or small business's disposable income. This plan spans over three to five years, making it more manageable and achievable for debtors. Creditor-Friendly Approach: Subchapter 5 encourages creditor participation and collaboration, promoting consensual resolutions and a more amicable environment. This can lead to increased cooperation, reduced litigation costs, and ultimately, a more successful restructuring process. Subchapter 5 vs. Chapter 11 Bankruptcy: Understanding the Difference While both Subchapter 5 bankruptcy and traditional Chapter 11 bankruptcy share some similarities, there are significant differences between the two. The primary distinction lies in the complexity, cost, and requirements associated with each option. Subchapter 5 offers a more simplified and accessible bankruptcy process specifically tailored to the needs of small businesses and individuals, while Chapter 11 is better suited for larger businesses with more complex financial structures. If you're a Tennessee resident grappling with financial difficulties, Subchapter 5 bankruptcy may provide a viable solution. Its streamlined process, reduced plan requirements, and debtor-friendly approach make it an attractive option for small businesses and individuals seeking relief from overwhelming debt. Before making any decisions, it's essential to consult with a qualified bankruptcy attorney who can guide you through the process and help determine the best course of action for your specific situation. Remember, bankruptcy is not a one-size-fits-all solution, and the outcome will depend on various factors. However, understanding the potential benefits of Subchapter 5 bankruptcy can empower you to make informed decisions about your financial future. At Kenneth C. Rannick, P.C., we specialize in bankruptcy law and can provide the guidance and support you need during challenging times. Contact us today to schedule a consultation and explore your options for a fresh start. Take control of your financial future with Subchapter 5 bankruptcy. Let us help you navigate the path to a brighter tomorrow.

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