More Consumers Turning to Personal Bankruptcy
Personal bankruptcies are on the rise, according to the American Bankruptcy Institute - and there's a reason that might actually be a good thing.
Obviously, filing for bankruptcy isn't ideal. In a perfect world, we'd all be able to overcome our debt burden by making a budget and sticking to it. Actually, in a perfect world, we wouldn't have a debt burden to speak of - hey, we'd probably be rich. But this is real life. And when you're talking about debts of $10,000, $20,000 or more, freeing your finances isn't so simple.
A 2 percent minimum payment on a 20K debt is $400 a month. That's $400 that can't go towards the mortgage, utilities or your car payment. Combine that with a lackluster economy that's not exactly encouraging cost-of-living increases and you get what feels like a hopeless situation.
So what's the good news? More people filing for bankruptcy means more people overcoming their troubles to beat debt.
Historically, bankruptcy has been unfairly viewed as something negative - an easy way out or a surefire way to damage your credit. Because of this myth, millions of Americans may have lost their homes to foreclosure or fallen further into debt instead of getting the help that was right under their nose. While it's true that bankruptcy will stay on your credit report for several years, it's not the only factor affecting credit. The number of credit cards you have, the frequency with which you use them, how close you get to your credit limit, whether you exceed the limit, how many late or missed payments you have, etc. all combine to make up your FICO score.
What's great about bankruptcy is that filing will actually get you closer to an improved score. Think about it. If your credit is already shot, what are you worried about? Relieving your debt obligations through bankruptcy can help you make the changes necessary to start improving your credit score. Not only that, but it will protect you from creditors, stop home foreclosure and provide a manageable way to pay off your debts - so you can keep more cash for your other financial obligations. And did I mention it's your Constitutional right?
Personal bankruptcy isn't a decision to be taken lightly. But it can be a powerful tool for those who need it. To find out more about bankruptcy or determine a plan right for your family, give our Chicago bankruptcy attorneys a call or sign up for a free, no-obligation debt analysis online. You've got nothing to lose but your debt.