Many Americans are facing debts ranging from student loans to credit card debts. Here in Long Island County, New York people owing large amounts of money are very serious in dealing with these debts. They make sure that their bills are paid on time to avoid higher interest rates. However, unexpected challenges such as unemployment or serious illness can hinder the ability of the debtor to pay off the debt, forcing them to use their most viable option – bankruptcy.
In 2010, national statistics shows that bankruptcy filings have decreased, but experts say that bankruptcy filings are more likely to rise in 2014 as more people are getting back on track and are now able to pay off their debts.
During the recession, many people had difficulties obtaining loans for cars and mortgages. Because of this, an average American had fewer financial woes. As the economy gets better, it became easier for a consumer to purchase a car or a house through a loan – this is the time when most people are having trouble with their finances. As mentioned above, unexpected events can rock the financial stability of a person. Lack of health insurance can seriously affect a person’s finances if he or she gets sick.
Employment is also one factor behind bankruptcy filings. When a person is unemployed, creditors simply cannot collect payments from the debtor’s Social Security. When the debtor gets a job, he or she may want to protect his or her earnings by using bankruptcy protection such as Chapter 13 bankruptcy.
If a debtor decides to file for bankruptcy, he or she has to understand the implications of the legal process. Though bankruptcy can help the debtor settle the debts, the debtor has to do his or her part to prevent the cycle of acquiring debts. Learning from financial mistakes is the key in living a debt-free life.
Source: Wbir.com, “Bankruptcy decline could reverse amid better picture,” Jamie McGee, Jan. 13, 2014