January 22nd, 2010 by Reed Allmand 
Household debt accounts for the largest share of the United States’ debt load. From the period of 2000 to 2008, American household debt grew $6.8 trillion. And many American debtors have found that a large amount of debt, coupled with job losses is a toxic combination. Bankruptcy has become the remedy for many Americans who have accumulated so much debt that they can’t survive any longer now that they have suffered a job loss or wage decreases. Mortgage payments, credit card debt and even medical debt are weighing down more and more Americans causing them to consider bankruptcy even in cases when they swore they would never file bankruptcy, no matter what. Three of the main reasons that Americans are filing bankruptcy are:
- Unmanageable debt. During the boom, many debtors were under the impression that their wages would only grow, so every time they received a raise they would buy a bigger house, charge more items to their credit card or take that much needed vacation. Unfortunately, all of that debt created a situation where they saved very little and once the job losses came they were unable to manage their debts. Bankruptcy allows them to discharge those debts and begin anew.
- Impatient creditors. Creditors are not as willing to work with debtors as we might hope. Just take a look at the foreclosure prevention program (Making Home Affordable) to see that creditors are often more willing to use strong arm tactics (foreclosure, lawsuits, wage garnishment etc.) than to wait patiently for debtors to find a new job or increase their income. Bankruptcy puts the brakes on creditor strong arm tactics giving debtors a chance to discharge debt or repay under reasonable terms.
- Permanent lifestyle change. Many debtors who were doing well during the financial boom are finding that their lifestyles changes are permanent, especially if they are nearing retirement. Where a debtor may have been able to afford a $400,000 home before, he/she may now need to seriously downsize, using bankruptcy to complete the process.
About Reed Allmand
Allmand's vision is rooted in his own financially precarious childhood in Abilene "My father always had difficulty holding a job and supporting our family, so after my parents divorced when I was 12, my sister and I got jobs to help make ends meet," he recalls. "I remember what it felt like as a child to worry that our car would be repossessed or home foreclosed on."
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