Top Causes of Consumer Debt in Chicago
It's hard to fix a problem when you haven't identified what's causing it in the first place. Debt is no exception.
A recent article on Bankrate.com lists the top causes of consumer debt. The good news is that some of the culprits - such as financial illiteracy and poor money management - can be remedied easily enough with education.
But as Chicago bankruptcy lawyers know, many people fall into debt because of circumstances mostly out of our control. These common causes include reduced income, unemployment, medical expenses, and divorce.
Depending on the root cause of debt, there may be different options for finding relief.
Thanks to a stumbling economy, a growing number of Chicago residents have been coping with a reduced or nonexistent paycheck for months.
One of the biggest problems with underemployment is that, initially, many of us look at the issue as temporary. Rather than get our spending in line with our newly lowered income, we may continue spending as usual with the help of credit cards. As our balance mounts with the accumulation of interest, we end up not only with a pay reduction - but with the burden of a pile of debt.
When income is finally increased - whether it's by working more hours or finding a new position - paying down debt requires sticking to a tighter budget than before.
Filing for bankruptcy may be a viable solution for those short on cash. Unlike Chapter 13, Chapter 7 bankruptcy doesn't require a payment plan. In fact, many Chicago bankruptcy attorney clients have seen their unsecured debts discharged entirely.
Nobody plans to become ill or go through a divorce - but these trials are an unfortunate part of life. They also happen to be expensive, financially and emotionally.
Legal and medical bills add up fast. Making the situation worse, most of us already have credit card debt, and perhaps a mortgage, to contend with. Increasingly, hospitals and doctors are taking credit card payments, leaving many people with balances that are instantly tens of thousands of dollars higher.
While there's no preventing unforeseen costs, becoming educated about your health insurance policy - and making adjustments to coverage gaps and other details if necessary - may help.
Legal and medical fees can leave debtors feeling helpless, and seeking assistance from financial advisors or debt consolidation companies can just make the problem worse.
Bankruptcy was created specifically to help people resolve overwhelming bills. With the legal protection offered by a Chicago bankruptcy filing, many people have been able to get back on their feet and in control of their bank account.
While denial isn't technically a cause of debt, it's what allows so many people to stay imprisoned by it.
For some of us, denial means waiting on a financial windfall, like a job bonus or inheritance, that never comes through. For others, it means avoiding the little number on our credit card bill that tells us just how much we owe - and how many months it will take to pay off our balance.
Examining finances for the causes of debt breaks the cycle of denial so that consumers can identify a solution. A Chicago bankruptcy professional can help determine whether a bankruptcy filing is the right solution for you.
More Blog Entries:
Credit Card Debt Takes Toll on Relationships of Chicago Couples: February 6, 2012
Rising Childcare Costs Lead Families to consider Chicago Bankruptcy: October 12, 2011
Top 10 Causes of Debt, Bankrate.com