The Causes That Take Someone to the Point of Filing Bankruptcy

 Recently, it’s a common occurrence to hear about someone losing their home to foreclosure or having to file for bankruptcy. The economy in the United States is in the tank and no matter what the media says, it looks like it’s not getting any better. US consumers are racking up debt at an alarming annual rate of 9.3% in 2011. The American consumer debt is now sitting at a grand total of $2.5 trillion. As the unemployment numbers continue to rise, many people in the next few years will be faced with filing bankruptcy.

There are many reasons of why people end up filing bankruptcy. The most popular are, unemployment, an extended medical illness, divorce and plain old just spent way more money than they make. In some situations the divorce will come with the bankruptcy filing. It seems that when financial troubles arise, family troubles follow closely behind. Many times, if a couple face their financial troubles head on and stopped kicking the can down the road, they might have been able to save their marriage. What usually happens is one will blame the other one for having to file for bankruptcy and the other one will point the finger right back at them. If they recognize the problem early on and consulted a bankruptcy attorney, they might have been able to work through it together.

Over the last five years most of people filing bankruptcy is because of credit card debt. They have just overspent. During the boom time, Americans bought one of everything just because everyone else had one. With creditors giving unlimited balances to people that really can’t afford it, people spent money like drunken sailors. At the end of 2011, it was reported that the average American had $16,000 in credit card debt. Considering that this same group makes an average of $35,000 a year, you can see how this will end. Many folks have given up on the good old days coming back and being able to dig themselves out of this credit hole. Facing the facts, they head on down to consult a bankruptcy attorney and find out they should’ve come in a year before. Creditors have continued to keep people in bondage by allowing their customers to make subminimum payments and keep the account open. Some have even increased the available balance as long as the individual can continue making the minimum payment. This allows the debtor to kite themselves into a bankruptcy filing.

After deciding to file an individual quickly learns there are two . The two types are unsecured and secured. This is important to learn because in a Chapter 7 bankruptcy all unsecured debts can be included in the bankruptcy discharge and the debtor will no longer be responsible for them. When it comes to secured debts, a bankruptcy attorney will tell you that you can’t keep it unless you pay for it. Secured debts are guaranteed by the property such as an automobile or a home. In many cases, depending on the kind of debt an individual has, will also help the bankruptcy attorney decide what chapter of bankruptcy to file.

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