Most Common Causes of Bankruptcy

Posted on June 9, 2013 by Staff Writer

Bankruptcy provides a great tool for people who are unable to dig out of financial holes. Rather than lose everything you have, bankruptcy can allow you to reclaim your life. But not all bankruptcies are brought about by crazy spending sprees. Do not let the stigma associated with bankruptcy influence your decision if your finances have gotten out of control.

According to multiple studies of the causes of bankruptcy, there are a handful of common causes of bankruptcy, one of which is excessive spending. The least common cause of bankruptcy is unexpected disasters or calamities. If a catastrophe changes your situation either by taking away your car, your job or other things you need to live, then bankruptcy can help you regain your footing on solid ground. This cause of bankruptcy only influences about seven percent of all filings.

Another cause of bankruptcy is divorce, which is how half of marriages end. From a financial standpoint, divorce can make it difficult to live the life you had before. You need to maintain two households with the income from your married life. It is also necessary to pay for legal fees, alimony, and child support if you become single again. Divorce contributes to eight percent of bankruptcy filings.

Job loss has been a very prevalent cause of bankruptcy in recent years. Almost eight percent of Americans are currently unemployed as of May 2013. These people usually pay for insurance out of pocket which can be a drain on already depleted household income. 22 percent of bankruptcies are influenced by unemployment.

By far the most usual cause of bankruptcy over the years is medical expenses. The bad news is that medical costs will continue to rise as new medicines and procedures are developed to keep us healthy. In 2013, Reuters figured that medical costs would increase by almost eight percent from 2012. When medical costs are already too expensive for most households, bankruptcies will be more prevalent. If you feel that any of these reasons is putting a strain on your finances, then consider reaching out to a skilled bankruptcy attorney from Phoenix today.

image courtesy of moggara12 / freedigitalphotos.net

Arizona Bankruptcies Continue to Fall

Posted on October 8, 2012 by Staff Writer

New data shows that bankruptcies in Arizona have continued to decrease over the last year. Filings in the Phoenix area have fallen at a double digit pace year over year. The US Bankruptcy Court in Phoenix released that in August of this year, only 1,809 people filed for bankruptcy compared to 2,431 in 2011. That decrease is 26 percent, continuing the streak of 14 consecutive double digit decreases.

The news comes as a shock to the citizens of the valley. An independent survey of 500 residents measured financial optimism at a record low not seen since June 2009. This is due partially to the fact that the employment market has yet to make a full recovery. Factors such as improvements in housing prices, employment growth, strong corporate performances and other factors seem to ease private debt.

An example of the reduction of private debt is overdue credit-card balances. Valley residents’ debts are down 16 percent compared to the past year through August to an average of nearly $5,000. Credit-card debt is a major kind of debt which consumers seek to ditch by declaring for bankruptcy. The same is true for mortgages and student loan balances over the past year for Phoenix residents. Luckily the news about Phoenix is merely a microcosm of the whole state of Arizona. Arizona is also seeing a decline in bankruptcy filings.

While this is good news for people in Arizona, it doesn’t mean they’re out of the woods yet. There are still people who need a fresh start while the economy is recovering. If you believe that bankruptcy is your only option, contact an expert bankruptcy attorney in Arizona today.

Bankruptcy Filings Up in Phoenix

Posted on July 31, 2012 by Staff Writer

The month of June saw an increase of bankruptcy filings in the Phoenix metropolitan area, to the highest point in the past nine months. Individual, as well as business, filings have increased steadily in the past four months. The number of filings on the state level line up with the same trend, with May numbers rising steadily from April figures.

The bulk of the filings were for Chapter 7 bankruptcy, in which a business or personal assets (only those which are non-exempt) are liquidated to pay debts and creditors, with debt forgiveness after the proceeds are exhausted. The rest of the filings were primarily Chapter 13, calling for a reorganization of the debtor’s finances to structure repayments to creditors.

Situations that contribute to bankruptcy filings are unemployment and underemployment without cessation. Another issue that impacts figures is increases in foreclosures. Many homeowners file for bankruptcy after receiving notice of impending foreclosure on their homes. The number of foreclosures is directly tied to the number of new bankruptcy filings: as foreclosure numbers increase, bankruptcy filings also increase within one to two months afterwards.

The good news indicated by these numbers is that bankruptcy filings for the Phoenix metropolitan area have leveled off, with the past sixteen months coming in at lower rates than the same months in 2010 and 2011.

Becoming faced with job loss or an inability to secure employment that pays what your financial circumstances require is not an easy situation. For legal and emotional support through this difficult time, contact an empathetic Arizona attorney who specializes in bankruptcy. This expert can assist you in navigating through what can otherwise be a stressful, humiliating and almost impossible turn of events, and can assist with recuperating financially afterward the case is resolved.

Bankruptcy Not Only for the Average Joe

Posted on July 30, 2012 by Staff Writer

After the annual National Football League’s draft season, it is reported that an estimated 200 college athletes will secure contracts worth millions of dollars. Yet, in as little as five or ten years, these same athletes may become bankrupt.

This phenomenon is not limited to any specific group of athletes, but basketball and football players seem to file bankruptcy in the highest numbers. Sports Illustrated set forth estimated numbers (in 2009) of 78% of NFL players and 60% of NBA players were experiencing financial strain between two (NFL players) and five (NBA players) years of retiring. Exactly how does this happen?

Although there are several reasons for this occurrence, one of the contributing factors seems to be a result of unsound financial advice. The new millionaires become magnets for so called “advisors” who may not actually be experts in handing financial matters. Also, marriages and extramarital affairs contribute to huge income losses for athletes.

Athletes receive their pay early in their careers and there is a marked lack of the same cash flow after retirement or as the athlete ages. Unwise money management from the beginning can create bankruptcy in later times.

The average person who files bankruptcy may not have the same status of financial high points as these professional athletes, but they face financial mishaps in a similar manner. The Supreme Court set forth the definition that bankruptcy “gives to the honest but unfortunate debtor…a new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of preexisting debt.” As such, bankruptcy is an available tool to help alleviate financial burdens and learn from past missteps to plan for a successful future. Contact a compassionate Arizona bankruptcy lawyer today to begin your new life.

More Law School and College Graduates Filing for Bankruptcy

Posted on March 8, 2012 by Staff Writer

According to a Reuters.com article, it’s becoming increasingly common for recent law school graduates to file for bankruptcy. The article tells the story of Diane Valle, a 26-year-old University of Maryland School of Law graduate who filed for Chapter 7 bankruptcy shortly before graduating from law school, due to her $150,000 in student loans and lack of job prospects. The young woman quickly learned that it was very unlikely that her student loan debt would be discharged through her bankruptcy filing, as student loans are only forgiven in bankruptcies when their continued payment would cause an undue hardship on the debtor – generally a very hard standard to meet.

Overall, the number consumer bankruptcy filings dropped in 2011, but several factors indicate a likelihood that former law students make up a higher percentage of those who are filing for bankruptcy. Access Group, a major lender of law school loans, reported that an unusually high number of students were defaulting on their loans through 2010. The U.S. Department of Education also reported an increase in defaulted college loans, and another study indicated that the number of college graduates who filed for bankruptcy increased by 20% from 2005 to 2010.

It’s clear that bankruptcy can happen to those who would have least expected it. Going through bankruptcy proceedings can be stressful and overwhelming. If you’re considering filing for bankruptcy, contact a knowledgeable, compassionate Tucson bankruptcy lawyer who can answer your questions and guide you through the process.

Number of Bankruptcies Drops, Yet Many Still Hesitant to File

Posted on February 29, 2012 by Staff Writer

The American Bankruptcy Institute found that the number of consumer bankruptcies in the U.S. dropped by nearly 12% between November of 2011 and November 2012. Yet based on an article in The Morning Journal, it’s clear that many Americans are still choosing to file for bankruptcy, as preliminary numbers indicate that around there were slightly less than 1.4 million bankruptcy filings in 2011.

University of Arkansas researchers attempted to discern the reason behind the high number of Americans filing for bankruptcy. Their findings allege that many individuals end up making the choice to file for bankruptcy only after a long period of essentially living in denial that filing for bankruptcy is the best choice for their situation. The researchers say that most people vainly plug along trying to pay off debts despite the fact that their financial situation is beyond repair.

In reality, it should be no surprise that Americans let pride get in the way of filing for bankruptcy. But the truth is that the decision to file bankruptcy shouldn’t be a source of shame. For many people (and corporations) bankruptcy proceedings offer a real opportunity to start fresh and begin rebuilding savings accounts and credit scores, instead of making large payments to creditors and living with the stress and hassle of being pursued by debt collectors.

However, the bankruptcy process is complex, and things don’t always go as planned. If you’re considering filing for bankruptcy in Arizona, contact an experienced Phoenix bankruptcy attorney who can ensure that the process proceeds as smoothly and quickly as possible.