Have consumers changed their approach to finances in the wake of the 2008 recession and housing crisis? A recent report suggests there may be cause for alarm.
Specifically, a survey conducted by an entity that trains community development professionals indicates that almost one-quarter of households in Texas and across the country have only enough savings to last 30 days. That’s not much of a financial cushion.
In the event of an emergency, those households with meager savings might be forced to incur credit card debt or explore unfavorable borrowing options, such as high-cost loans.
As a bankruptcy attorney knows, even missing a few credit card or loan payments can negatively impact a consumer’s credit score. In addition, the high interest rates charged by those lenders can create significant debt management struggles. As if those debts didn’t create enough stress, creditors may refer debts to third-party collection agencies that employ aggressive, often harassing collection techniques.
Anyone facing such a debt management crisis might benefit from a consultation with a bankruptcy attorney. A Chapter 7 or Chapter 13 bankruptcy filing might present a fresh start. In addition to the automatic freeze that halts creditor collection efforts, a bankruptcy filing might be a way to end an individual’s self-defeating cycle of late payments, high interest rates and penalties.
A bankruptcy attorney can also provide advice about debt management strategies that might help an individual start rebuilding his or her credit. For example, credit accounts with high limits are often closed or frozen after a bankruptcy filing. After bankruptcy, an individual may even be able to open new credit accounts with lower debt-to-credit ratios.
Source: Daily Finance, “10 Signs You Are Headed Toward Financial Ruin,” Ellen Chang, Sept. 19, 2014