In the past 24 months, the American suburban landscape has been ravaged by personal bankruptcies. Expanded credit limits, inflated home prices and a false sense of security in everything material contributed to one of the worst financial landslides since the 1930s. Needless for some to say, a lot can be learned from the way so many of us treated our credit reports in the last few years.
To that end, the Institute for Financial Literacy (IFL) recently shared their thoughts on what our society can take from the thousands of bankruptcy petitions filed in 2008.Surprising the IFL was that this time around, people in higher education brackets were greatly affected by the downturn, as were those in higher income brackets. Self employed individuals have also taken a disproportionate hit. Thus, many are starting to deem this a "middle-class" recession.
From a demographic perspective, more white people have filed for bankruptcy than blacks, as have more people of Asian descent. The most alarming metric occurred in the Asian population, as their rate of filing increased by an entire percentage point within one year. Given their presence within the entire U.S. population, one percent is considered a significant jump. One theory states that the Asian increase may be related to the number of small business owners hit particularly hard by this recession.
An interesting trend arose relative to home ownership. It seems that the desire to keep the family own in lieu of financial stability proved that having a house in America has become a seriously emotional issue. People have been pushed into believing that owning a home is the best sign of one's financial wherewithal. In turn, it has created an unreasonable connection to a material asset that is now more unaffordable than ever.
The IFL made a note about the role a dependable bankruptcy attorney can have in separating a client from the material mindset, showing them that in the long run, sometimes the loss of an asset can be beneficial. Sure, the family home holds great intrinsic value. However, is it really worth the tight budget it requires? Are you cutting back on the necessities such as food and medical, just so you can hold on to a home you can't afford?
The report also discusses the hazards of those trying to file on their own, given that one can only file for bankruptcy once every eight years. If things do not go right the first time, a person can face a very long-term financial struggle until they are eligible to file again.
It seems that almost any discussion about bankruptcy today involves the 2005 legal reform and the means test it spawned. Creditors are simply not seeing the return from that effort, given the personal credit bedlam that this current economic maelstrom has washed ashore. Unemployment numbers of this magnitude could not have been predicted. It's not like the majority of those filing bankruptcy are choosing to not pay what they owe--with unemployment remaining near 10%, paying the bills is simply not possible.
The IFL also used their findings to reveal a few misconceptions about bankruptcy. Specifically, many people believe it is grounds for termination from your job. Even though credit reports are reviewed in some job application processes, the federal bankruptcy code prohibits employment discrimination based on a bankruptcy filing Also, the stigmas that those who file are "irresponsible" people is relaxing. These are difficult times and people from walks of life are being impacted.
Bankruptcy is a real option for many people. If you're facing financial difficulty, don't think of it as a last resort. A properly planned bankruptcy can help you keep the family home or car, and can get rid of all of your credit report. There's not a better time- call today. In North Carolina, contact the Law Offices of John T. Orcutt at 1-888-234-4181. Or visit www.billsbills.com to take our free debt questionnaire.