The past ten years have proven to be financially challenging for numerous American families. Two economic recessions and constant company outsourcing for competitive reasons have impacted households across the country. Some have been hit harder than others. Over this period, disposable income has diminished while home equity values for retirees have drastically reduced. Alongside, credit card debt and student loan balances have rocketed, with persistent high unemployment rates.
Given these conditions, it’s almost miraculous that families can maintain a balanced budget and get by week to week. However, for many, the situation is considerably grimmer. Consumer bankruptcies are currently at a five-year peak. Despite consumer debt decreasing since the 2008 “Great Recession”, indicating a degree of economic improvement, not all families have reaped the benefits. Many had relied on home equity loans to reduce credit card debt, but decreasing house prices have eliminated this possibility.
For individuals who have attempted to keep going by borrowing more, their only escape might be to generate best income to manage steadily growing monthly debt repayments. When debt collectors incessantly make phone calls and their proposals fail to make sense, filing for bankruptcy might be a viable solution. This avenue has been chosen by many in recent times, and the social stigma once attached to it has largely fallen away.
Is bankruptcy the right path for you? It’s important to understand that this is not just a financial decision – it involves personal and emotional factors too. Assess your current financial position, your short-term prospects, and whether your monthly financial commitments outweigh your income. Seek advice from debt consolidation professionals to explore your options and establish if a tailored plan with your creditors could gradually improve your situation.
If bankruptcy appears to be the most beneficial relief and provides a chance for a fresh financial start, planning becomes the next step. Timing matters relating to your date of debt accumulation and future income. Contrary to popular belief, tax assessments, charges, and interest can’t be cleared. Negotiations with tax authorities might be possible, but that’s a separate process.
In addition, student loans are excluded, and alimony and child support payments might be dismissed depending on state laws. To navigate this, you’ll require a proficient attorney. Self-help instruction guides can be tricky since courts expect you to thoroughly understand the proceedings. Non-compliance with rules can lead to unexpected outcomes.
Bankruptcy may negatively affect your credit score, but some creditors may still consider you after your application is processed. You’ll likely receive numerous offers in your mailbox, some which you might want to consider, to rebuild a good payment track record.
Bankruptcy can sometimes be the best solution, but it may not always be the right choice for everyone. Therefore, seek expert advice before deciding on your course of action.
