What Is Tipping American People into Bankruptcy?

With the costs of housing and food skyrocketing, times are surely tough. According to a recent official report, the number of bankruptcy cases was more than 950,000 that were filed between 1st July, 2007 and 30th June, 2008. This is an increase of 28.9 percent from same period of time in the previous year.

It is not simply individuals who are facing this dilemma. Of the overall number of bankruptcy applications, the number of business filing amounted to 33,820 – which has increased 41.6 from the preceding year.

So, where is the money going really and what is going on? Here are some factors that are tipping more American people into bankruptcy:

Housing Costs

Meltdown of mortgage industry was tough enough on the American economy, and the homeowners really had the toughest time. Families who couldn’t afford to pay their monthly mortgage dues risk losing their shelter in foreclosure. The declining values of home are making this problem even worse as homeowners can not count on taking loans against the low home values to pay off other debts (like credit card debts), especially when value of outstanding loans exceed the market value of your home.

Tip: Beware of the variable home loans. In case, you have already taken one, consider discussing other possible options with the lender, suggests the bankruptcy attorney Wisconsin, like refinancing it to fixed-rate mortgage.

Credit Card Debts

Today’s culture that we live in is more of "got to have it now" – and credit cards really allow fellow Americans to buy almost anything anytime, regardless of the fact that whether they can afford it or not. The steady stream if credit card offers being mailed further exacerbates this issue and thereby compels a lot of Americans to open bank accounts and take even more debts than they possibly can afford.

Tip: Pay off balance due on each credit card on a monthly basis, whenever possible. If you are carrying a due balance, always try paying more than minimum required amount to be paid. Else, it might take you years to pay off your balance completely. The Milwaukee attorney suggests that when your credit card charges high interest rates, then call your credit card bank and ask them to lower the rate or consider having your balance transferred to another bank account that offers lower rate of interest.

Student Loans

Cost of education increases every year, and the students need to take on unprecedented amount of loan to pay for their undergraduate and/or advanced degree. As per the 2003-04 National Post-Secondary Student Aid Study or NPSAS, 2/3rd of all undergraduate students tends to leave the college with at least some debt, and average student loan debts among the graduating seniors tend to be around $19,000.

Tip: Students should consider consolidating their loans, suggests the Bankruptcy attorney Milwaukee. It would help them reduce the number of lenders to which they owe money, and also lock in steady rate of interest. If you believe that you wouldn’t be able to make the loan payments, then look into forbearance option or economic hardship deferment, or consider extending life of the loan.

William Green is a former partner of Summit Law Office LLC in West Allis, Wisconsin. He received his law degree in 1990 from the University of Minnesota Law School and later moved back to Milwaukee where he has lived for 30 years to start his own sol