Good People File Bankruptcy

Written by Jessica Alba

Although there may be an unfair stigma attached to seeking debt relief, do not be misled. Good people file bankruptcy. In some cases, it is due to poor financial decisions. However, with the unemployment rate rising to the double digits, many individuals simply have no other option. In addition, a large segment of society is only one or two paychecks away from destitution, if an accident or illness prevents them from working. If you are considering bankruptcy, you are not alone.

Poor Financial Decisions

The number of people who are to the point of filing for bankruptcy, or have let the thought cross their mind, due to poor financial decisions, is probably in the thousands or millions. The main culprit, of course, is credit cards. It is so easy to pull out that piece of plastic and plunk it down on the counter to purchase anything from groceries to automobiles.Unfortunately, the bill will eventually come in the mail. Unless you keep track of exactly what you spend, and know you income will pay it off at the end of each month, you can get into financial trouble pretty quick, and bankruptcy is only a heartbeat away.

Some people pay all of their bills via credit cards, using them for their benefits program. They successful pay them off monthly, to avoid the penalties and interest. The majority of people have a monthly balance due, with significant interest, and they can never seem to get out of the hole.

Credit card companies are very quick to blame the customer. However, did you know that the majority of credit card applications are sent to people between the ages of 18-25? Who are these individuals? Kids, who are just getting started or going to college are a prime target, because they need the money. Plus, they are less likely to count the cost, before using that “free money”.

Of course, credit cards are not the only source of poor financial planning. Often, it is simply making a major purchase without the paycheck to back it up. For example, many people have gotten in over their heads, after purchasing houses with adjustable-rate mortgages. When it comes time for the rate to change, the monthly payment is out of reach.

Unemployment

Many people are facing bankruptcy, because they are now unemployed. Some have worked for the same company for decades, yet have become victims of downsizing or businesses that have had to close because of the economy. Unfortunately, finding a new job beyond the age of forty can be quite a challenge. The younger generation is less likely to get sick or need major health care. In addition, they have been to school more recently.

Even for people who have saved for a rainy day, the money only goes so far. In truth, most families count on 2 incomes. If one of the adults loses his/her job, it can mean financial ruin. Maybe it was easier to go out and find a job within a week a decade or two ago; but, not anymore. So many individuals have had to relocate. Then, because many in their town are in the same boat, a house becomes a white elephant, and you cannot even pay someone to take the mortgage.

Illness and Injury

Statistically speaking, the majority of individuals are essentially one paycheck away from being in financial trouble. As a rule of thumb, financial advice says to have at least 6 months worth of income in the bank. Realistically, most people are just squeaking by financially. So, when major illness or injury strikes, times get really tough.

In fact, before claiming bankruptcy, good hardworking people have sold almost everything to satisfy debt, before claiming bankruptcy. But, with a major illness like cancer, even keeping only the clothes on your back will not be sufficient.

Despite the ads on television, it is not so easy to pacify creditors, even if they know you are going through a really rough time. They count on your payment to pay their bills. So, it turns into a vicious circle.

So, if you are considering bankruptcy, do not beat yourself up too bad. Get financial advice to determine whether you have any other financial options. Explore the different types of bankruptcy, and determine if the financial benefits outweigh the cost, before making the finally decision.

Regardless of what anyone says, bankruptcy is not the easy way out. You may stop the creditors from calling. But, you also ruin your ability to make a major purchase for the next 7 years. If you choose rent-to-own items, you will probably pay at least double or triple the true value. Even if you manage to stay in your residence, you will be basically starting over, after all the paperwork is complete.

But, no matter what anyone says, know that you are in good company. You are not a bad person. Many good people file bankruptcy; and you are not alone.