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.

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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.

Choosing a Credit Card After Bankruptcy

Posted on November 20, 2012 by Staff Writer

Many credit card companies see an opportunity for a quick sale in people who are recovering from bankruptcy. Without access to cash, and oftentimes with many assets gone, people recovering from bankruptcy often turn to credit cards as a means to get their lives back on track. While this is an obvious answer, and, if done correctly a smart one, a consumer—especially if he or she has a history of bad credit or money mismanagement—needs to be careful when choosing which card to go with. Many credit card companies have come under fire in recent years for having unrealistic payment plans and bottom lines, especially after the 2008 recession.

One such practice that consumers should be wary of is a company that offers cards with a crazy-high Annual Percentage Rate (APR). According to Daily Finance, while the “infamous First Premier credit card with its 79.9% interest rate has vanished, as have its predecessors, a 59.9% and a 49.9% APR card… other issuers seem happy to fill the vacuum left by First Premier’s absence in this market segment.” While securing a credit card after bankruptcy is important—not only as access to cash, but because using a credit card is essential to building back up credit after bankruptcy—choosing one with a low APR is essential.

The CARD Act, passed in 2009, prohibits fees from amounting to more than 25 percent of a card’s credit limit, but many credit cards still have very high fees. The CARD Act, according to Daily Finance, also “prevents issuers from hiking interest rates on existing balances and makes the bank give you both a grace period and a warning before raising your APR,” but loopholes, such as those for business credit cards, give consumers, especially those recovering from bankruptcy, something to be wary of.

Choosing a credit card after bankruptcy is only one of the many difficult processes a person recovering from bankruptcy will go through. Don’t do it alone. Contact a dedicated Arizona bankruptcy lawyer today.

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Credit Card Debt Rises, Delinquencies Fall

Posted on October 20, 2012 by Staff Writer

Credit card debt is on the rise for the American consumer, which could be bad news for the number of bankruptcies as the holiday shopping season approaches. According to the American Banking Association Banking Journal, “average credit card debt per borrower increased from $4,699 in the second quarter of 2011 to $4,971 in the quarter that just ended—a rise approaching 6 percent.” According to TransUnion, this average is, however, still low compared to the $5,719 average that peaked in the second quarter of 2009.

The news isn’t all bad, however. At the same time that debt reached its relative new high, “the second quarter saw the national credit card delinquency rate fall to 0.63 percent, down ten percentage points from the first quarter.” This, according to TransUnion, is the lowest level since the second quarter of last year, and last year was the lowest level of delinquencies since 1994.

This could be indicative either of the fact that American consumers have begun to learn to spend within their means, or that they have adjusted to paying higher rates of credit card debt as a percentage of monthly expenditures. Either of these could be one reason that the number of bankruptcies in Arizona has continued to drop recently. According to CreditCards.com, Arizona rose six spots from number 21 to 15 for the listing of bankruptcies per capita. Better management of credit card debt—including a reduction in number of delinquencies that follows the nationwide trend—would have a direct impact on the number of bankruptcies in a state.

If you or someone you know is considering bankruptcy, as a result of credit card debt or unmanageable delinquencies, don’t go through it alone. Contact an experienced Arizona state bankruptcy attorney today.

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