Fewer People are Filing for Bankruptcy because of New Habits

Posted on August 18, 2013 by Staff Writer

Since the beginning of 2013, consumers in the United States are not filing for bankruptcy protection as much as previous years. The way consumers are carrying debt has also improved. Credit card debt is one type of debt that can be removed or reduced through bankruptcy. Only 2.4% of credit cards were delinquent by thirty days or more, which is the lowest percentage in over 20 years.

“Sharply lower delinquency levels reflect improving consumer balance sheets, steady job creation and a continuing increase in household wealth,” said James Chessen, the American Bankers Association’s chief economist. “Many consumers have learned the hard lessons of recession and have redoubled their efforts to keep debt at manageable levels.”

This decrease in filings is a trend not only nationally, but in the Phoenix as well. Compared to the same period of last year, there was almost a 25% decrease in filings. Overall, bankruptcies have been decreasing since their peak in 2009.

Certain bankruptcy experts look to temper this good news by looking at possible causes for this decrease. They say it is not necessarily a sign that the economy is recovering, but that consumers are reluctant to sign up for new bills. The executive director of the American Bankruptcy Institute, Sam Gerdano, said that consumers have limited the chance of filing for bankruptcy by living on their base income alone.

If you have experienced a change in your life and need a fresh start financially, consider filing for bankruptcy. Large medical expenses, losing your job, and filing for divorce can all put a major strain on your bank account, even if you are frugal with your money. Don’t let an unexpected event get in the way of your future, contact an experienced bankruptcy attorney in Phoenix today. They can see if you qualify for bankruptcy and let you know what options are available to you.

A Study of How Sadness can affect Personal Debt

Posted on April 25, 2013 by Staff Writer

People seek different ways to deal with sadness. It seems unfortunate in the grand scheme of things, but a study shows that sadness can have a negative effect on a person’s financial bottom line and also further deteriorate their mental state.

In a study run by students Jennifer Lerner of Harvard’s School of Government and Elke Weber and Ye Li of Columbia reviewed the connection between sadness and debt. The results were published in the Psychological Science journal last year.

They came up with a term called “present bias”. The unhappiness of people makes them value the present more so than the future. This leads them to put more importance on instant gratification rather than the long term consequences. So it seems natural that “retail therapy” would be an avenue that people would use to make them feel better.

The bad news is that when debt becomes a problem then the sadness can turn into depression. Especially if the debt can’t be turned around and necessitates a bankruptcy. “Many of us confuse our self-worth with our net-worth,” clinical psychologist Bradley Klontz said. “As such, financial problems can deal devastating blows to our self-esteem. Bankruptcy can lead to feelings of guilt and shame, and cause us to isolate from our family and friends out of embarrassment.”

For some people, it has to get worse before it can get better. Filing for bankruptcy can alleviate your money issues and allow you to have a fresh start If you feel like bankruptcy is your best option, then contact a legal professional who can help you through the process. An experienced bankruptcy attorney in Phoenix can show you the options for turning around your situation so contact them today.

image courtesy of freedigitalphotos.net

Credit Card Debt Rising

Posted on March 30, 2013 by Staff Writer

According to a recent TIME.com article, the Federal Reserve Bank of New York is reporting that although American debt in general dropped overall in the third quarter of 2012, consumer credit card debt rose by $2 billion in that quarter. This occurrence, the American Bankers Association (ABA) is warning, when combined with the still-uncertain economic forecast, may very well lead to increased credit card delinquencies in 2013.

TransUnion, a major credit bureau, reported that the average borrower was carrying $4,996.00 in debt by the end of the third quarter of last year. That amount is expected to increase to $5,446.00 by the end of 2013, which will mark the highest average amount of debt since 2009. Unfortunately, TransUnion agrees with the ABA that credit card delinquencies, defined as people who are more than 90 days late paying their bills, will increase over the next year. As the credit bureau pointed out, banks are again signing up customers for credit cards who are at a higher risk of defaulting on those credit card debts, in large part because the credit card industry generates a great deal of revenue for banks. These banks also may extend credit at relatively high interest rates with the goal of marketing other products to consumers, such as mortgages and business loans.

Increases in credit card balances and default rates will only lead to collection agencies harassing consumers for payments and lawsuits over paid debts. While common sense tells consumers to avoid the credit card trap altogether, life circumstances may force consumers to fall into debt anyway. Often, credit card bills result from a consumer’s inability to pay other bills, such as unexpected medical expenses and routine household expenses, which might occur due to illness, disability, death, or job loss.

If you should find yourself in this situation, bankruptcy may the best alternative. Filing for bankruptcy can stop debt collection agencies from continually contacting you, stop wage garnishments that you cannot afford, and stop lawsuits against you to recover debts. Moreover, bankruptcy can give you a solution to the debts that are overwhelming you, allowing a fresh financial start for you and your family. Consult with your Phoenix bankruptcy attorney today, and see how bankruptcy can make a difference in your life.

Am I allowed to keep any credit cards I had prior to filing bankruptcy?

Posted on February 11, 2013 by Staff Writer

Most likely you will not be able to keep any of your credit cards after filing bankruptcy. If a credit card has a balance then it must be listed in the bankruptcy. The credit card company will then be notified that you filed for bankruptcy and close down your account. Now, if the balance on a specific credit card is zero then they do not have to be listed in the bankruptcy and won’t be notified when you’ve filed. However, if they check your credit at a later date and see the bankruptcy then they will most likely close out the card.

As soon as a bankruptcy is filed an Automatic Stay of Protection is created. This Automatic Stay prevents creditors from ever attempting to collect from you again. The penalties for violating the Automatic Stay are very harsh and this is why your credit card company will close out your account—they don’t want to be accused of attempting to collect money from you after filing bankruptcy.

Don’t worry; you will be able to get another credit card after filing for bankruptcy. Most clients report that they are inundated with credit offers soon after filing.

Credit Card Tips after Bankruptcy

Posted on December 26, 2012 by Staff Writer

A Chapter 7 bankruptcy will stay on a credit report for up to 10 years. A Chapter 13 bankruptcy will stay on a credit report for up to 7 years. Everyone who applies for a credit card, car loan, or mortgage, gets their credit report reviewed. Filing for bankruptcy can make you a poor candidate for bowing money or getting credit, but there are ways to rebuild credit.

While it always seems that credit cards are the reason that people declare bankruptcy, they are one easy way to rebuild credit. There are credit cards which are termed secured, which can be used by those who filed for bankruptcy. It is termed secured because the user secures their debt by paying a security deposit to the credit card company.

Before you apply for this type of credit card, do some research and get some counseling. Make sure that the card reports to all three credit bureaus. This will allow your timely payments to affect you credit scores as much as possible. Once you have a new credit card, keep the balance around 10% to 15%. Another common mistake is closing credit cards. If you close a card, it reduces the amount of credit you have available. If you can’t stop using your cards after the balance is paid, then just cut the card in half.

Bankruptcy can be an important tool to secure your financial future. If you have any question about rebuilding your credit or life after bankruptcy, reach out to a professional. Contact a helpful bankruptcy attorney in Tempe who can guide you back into a new financial future.