In 2010 1.5 million Americans filed for personal bankruptcy and many more considered their bankruptcy options even if they didn’t file eventually. But why are so many Americans considering bankruptcy?
Here are a few reasons why:
1. While the corporations are making more money as the economy tries to recover, many ordinaryAmericans aren’t seeing the difference in their paychecks. The rise in bankruptcy has been prompted by not only the high unemployment rate but by the falling amount of compensation employees receive.
2. Americans now have fewer assets to cushion them in times of crisis-bankruptcy has become the safety net they need. One of the remarkable aspects of the economic boom was that while manyAmericans earned more money that didn’t translate into more savings. Many Americans used their homes as a place to build savings in the form of equity while spending lavishly with credit cards and other forms of unsecured debt. Unfortunately, when the housing market crashed, along with the credit markets, many Americans were forced to file bankruptcy to save themselves from destitution.
3. Many more Americans are filing bankruptcy because creditors have become more aggressive and less willing to compromise with those who are in default. The credit card companies and even mortgage lenders have shown debtors that they are more than willing to file lawsuits, garnish wages and rush foreclosures because they need to get as much of the outstanding debt as possible.
4. Bankruptcy remains as one of the few ways that debtors can level the playing field and give themselves a chance to save important assets such as their home, car or even a small business. Chapter 13 bankruptcy is especially useful when debtors want to save their important assets while reducing and eliminating other unsecured debts.