When Is It Time to Pull the Bankruptcy Trigger?

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Recently, it was reported that the average American has $16,000 in credit card debt. While $16,000 doesn’t sound like a lot of money, this number was only $4000 in 2008 and you still need to consider the income of the same average American. Four years ago the average was $40,000 a year and now it has declined to $35,000 a year. When you look at the amount of debt, add interest and living expenses, you have the makings of a financial disaster. Most of these folks are only making minimum payments as they are charging themselves into bankruptcy. At the end of January 2014, it was reported that consumer debt had surpassed $11.36 trillion. Add to that the student loan debt nationwide is now a whopping $1.049 trillion. The media keeps reporting that things are getting better but when you look at the debt ratios and reduced income, I see a different picture. The US government is no different than the consumers, the debt ceiling continuously has been lifted to make you wonder why they even have a ceiling at all. The federal government now owes over $17 trillion and really can’t even afford to pay the interest payments but is allowed to by printing money. The biggest purchaser of the US debt is now the Federal Reserve. That’s pretty cool to borrow real money and be able to print phony dollars to pay back the money they are borrowing. If you ask me, it’s complete craziness. If the US government would file bankruptcy and walk from all their debt they probably would. But instead, they have hung the debt on the heads of the American taxpayers making our grandchildren’s grandchildren obligated for this excessive spending.

The smart money will take a look at the overall picture and if necessary file bankruptcy to cut their losses just like all the corporations do. People buried under a mountain of debt should consider speaking with a bankruptcy attorney to see if filing is even possible for their situation. In most cases, the bankruptcy attorney will offer some kind of resolution that will be feasible. When a person should look for to see if they should consider filing bankruptcy is to add up all their debts and figure out how long it would take to pay them off if they stop charging today. If it takes longer than five years they should strongly think about filing bankruptcy. Although that sounds simple, creditors would like consumers to believe it’s a lot more complicated than that. They have spent billions of dollars on Madison Avenue to get their opinion across that changes the entire dynamic of the American consumer. They want Americans to feel bad about themselves if they use bankruptcy. Using the media, they have made the American consumer feel like a complete failure when they face financial trouble. What they don’t tell you is that corporate America uses bankruptcy as a way to make a company financially stronger. In today’s markets it’s very common for a corporation to file bankruptcy to eliminate the bad employment contract they’ve gotten themselves into with a union. If the unions won’t negotiate, they will first threaten them with bankruptcy and if necessary actually file to force the unions back to the bargaining table. Also when many bad investments are made, they could use this to clear the books and get a fresh start. When they use bankruptcy it’s smart business, but when you or I do it, were dishonest at and or a failure. That’s why we always need to remember who makes the rules. When the market virtually collapsed back in 2008 many people that never thought they would ever be, were faced with a bankruptcy filing. This helped to eliminate much of the stigma that it had in the past. People need to do what’s best for their families and not worry about what creditors say or think about them.


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