Data Shows Recession Decimated Household Wealth; Tennessee Bankruptcy Can Help Families Rebuild Finances
If your family's finances are still reeling from the recession, you're not alone.
According to new data from the Federal Reserve, median household net worth fell almost 40 percent between 2007 and 2010. At its lowest point, median wealth dropped to 1992 levels.
Middle-class families lost the most financial momentum. While the wealth of the richest Americans is often held in bonds and other investments, the wealth of middle-income households is largely tied up in their homes.
When real estate values plummeted, so did net worth. As we mentioned on the Tennessee Bankruptcy Lawyers Blog in May, 1 out of 3 homeowners owes more on their house than it's currently worth.
In 2007, the American family's median wealth - in other words, the point at which exactly half of all families are worth more and half are worth less - dropped from $126,400 to $77,300. In contrast, the median wealth of the wealthiest 10 percent of Americans actually rose 1.9 percent to $1.17 million.
Home values aren't the only reason behind the decline. As a result of the recession, many households took on more debt, from credit cards to home equity loans. The more we owe, the less wealth we have.
The good news is that, while home values are controlled by the market, debt can be controlled by our financial decisions - like filing for bankruptcy.
Chapter 13 provides households with the ability to reorganize debt into more manageable payments - and, often times, discharge remaining debts at the end of the repayment period - while also protecting against foreclosure.
Those who qualify for Chapter 7 may be able to discharge certain debts entirely.
It's been a long, hard road these past several years. For many families, filing for Tennessee bankruptcy can finally clear the path to a brighter financial future waiting just around the corner.
More Blog Entries:
Fed: Recession Kicked Median Household Wealth to 1992 Level, by Tim Mullaney, USA Today