Hurricane victims and bankruptcy: Is there a correlation?
These catastrophic storms can cause financial ruin. Is there a connection between the storms and bankruptcy petitions?
Hurricane after hurricane has come through Florida. This year seems particularly difficult, as the catastrophic storms formed in quick succession. Florida residents are notoriously resilient and will bounce back from this hurricane season. However, the damage done by these storms may have a larger financial impact than expected.
Is there a correlation between bankruptcy filings and hurricanes or other natural disasters?
It is not surprising that families often struggle with financial obligations after a hurricane. These storms can cause massive damage to property, annihilating homes, vehicles and even destroying places of employment. Unfortunately, financial obligations for paying off mortgages and loans do not disappear when the home is destroyed or the vehicle lost. Insurance policies may not offer relief. These policies often cover wind damage, but not damage caused by flooding. In these cases a separate policy is often required to provide coverage.
As such, it is not surprising that a hurricane can lead to financial ruin. This leads some professionals to question whether the storms also result in an increase in bankruptcy filings.
A study by a professor out of Harvard dug into the issue, finding that there was a correlation between natural disasters and bankruptcy filings. Interestingly, she found that the filings often peaked three years after the event. The professor continues, extrapolating from this data that families appear to attempt to get back on their feet as best they can before realizing their financial struggles are too much to manage. At this point, they move forward with a petition for relief through bankruptcy.
What relief can bankruptcy offer?
Bankruptcy is intended to provide those who qualify with a fresh financial start. Various forms are available, allowing the applicant to find the right type of relief for his or her situation. For some, discharge of all assets and a clean slate is best. This is generally available through a Chapter 7 bankruptcy. Others prefer to seek more manageable payment options, putting together a repayment plan that spans three to five years.
Businesses are also eligible for relief. A business could move forward with a Chapter 7 to liquidate assets or a Chapter 11 to reorganize.
What if I am considering bankruptcy to help get back on my feet after a hurricane?
A successful petition for relief from debt through bankruptcy can help an individual or business rebuild after suffering financial ruin due to damage from a hurricane. Determining the best type of bankruptcy for your situation can be difficult.
An experienced bankruptcy attorney can help. After the storm has calmed and the damage is surveyed, this legal professional can help guide you through the bankruptcy process working to help set you up for a more stable financial future.