Reasons That May Increase Personal Bankruptcy
Nobody wants or plans to file bankruptcy, especially with the
recent drastic changes in the bankruptcy law which makes it more difficult
or even impossible for people in certain situations to even consider it. Bankruptcy
is a personal thing and is also often a very emotional thing, so it is not
something to enter into without a very thorough examination of your bankruptcy
options and alternatives.
Today's culture has seen an unmatched rise in the number of people who file
personal bankruptcy. With the amount of consumer debt at an all-time high,
a growing number of people feel that this is the best option for them so
they can start over with their finances. Bankruptcy is, in a nutshell,
a person's
inability to repay the debts that they have accumulated with any number of
creditors. When a person decides to file bankruptcy, they are often admitting
that they see no way out of the debt that they have built up. This can happen
over a period of a few months or several years and for a variety of reasons,
including school loans, medical bills, and credit cards, among others. Many
people encounter circumstances that make it difficult to repay their debts
while others might buy a lot of stuff on credit with the plan of declaring
bankruptcy the entire time.
The only problem with this idea is that it does not change
a person's behavior. Instead, it almost reinforces the irresponsible habits
and behaviors that
resulted in the debt in the first place. People who find themselves in
this predicament
and want to avoid personal bankruptcy will want to look into bankruptcy
alternatives before making their final decision
There are a number of factors are thought to be responsible
for the steady rise in the rate of personal Bankruptcy filings in recent months.
The
September peak of 3541 filing per day is a call for concern to many rights
thinking
people. The numbers of filing recorded in the months following October
2005, seems
to mean that the new law is the panacea all of us needed. Well, as
we can see today, that is not to be. In fact, it seems that owing to some
factor,
the
rate of filing will continue to climb at least into the foreseeable
future.
There are various factors which are responsible to increase bankruptcy.
These are:
1) Natural disasters factor:
Natural disaster is one of the important factors that can increase
bankruptcy. As people around the world live in fear of ever increasing
incidents
natural disasters, many would still file for personal bankruptcy
as a direct consequence
of lost of possession during emergency. Natural disaster can cause
a lot of havoc on the human society. Some times it's unimaginable.
However,
preparedness
and heeding warnings, both official and natural warnings can alleviate
suffering. Responding to warnings at the appropriate time can help
in moving some valuables
from the troubled area.
Many are already feeling the effect of these disasters. But
the full consequences will yet be experience in the nearest future.
The many
that lost means
of livelihood are most likely to face difficulties in paying
mortgage loans, keep up with
interest payment on credit card, and medical expenses. These
ultimately will
lead many to result to filing for personal bankruptcy in the
years to come.
2) High interest rate factor:
Credit card companies are now putting back credit into the hand
of individuals they once vilified. "We don't care about your credit score." "With
bad credit you are qualified, good credit will be rewarded." "You
are guaranteed $7000 credit line in 10 minutes" has become the gimmick
many finance company adopts to entice unsuspecting members of the public.
If it's true that most filers were bad debtors who deliberately refused
to pay,
as claimed by financed companies, what assurance do we have that they
would the new debt? It would be recalled that prior to the enforcement
of the new
bankruptcy law in the United States, many credit card companies went
to the senate saying, America runs the risk of being ruin by bad debtors.
Interest
rate on credit card is on the increasing side and those once declared
bankrupt faces additional risk. Then going bankrupt again is not foreclosed.
3) Mass layoffs factor:
As companies in the building and transportation equipments
industries struggles to survive in a saturated market,
cutting down on cost
is not an option.
Reducing the number of employee on their payroll has
been the route many takes to achieve
reduction in cost. Disengaged employees are really in
for a hard time in face of surging cost of living. High transportation
cost,
rising
medical bill makes
heath insurance inevitable.
These and many more jostles for the meager income of
a disengaged family head. Not to be overlooked are
mortgage and car loan.
In an era of
mass job loss,
it is only reasonable to expect more to file for personal
bankruptcy. Are we saying this to scare or put fear
in you? In no way!
To be forewarned is to
be fore armed they say. The purpose therefore, is to
help you be on guard.
Planning for
filling bankruptcy law
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Financial
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