A variety of factors have combined to put a new pinch on Americans, even as the economy is beginning to show signs of recovery, according to a number of news outlets. Here’s a look at the forces behind this new pinch and what it might mean for the typical American.
Prices Going Up
Fuel: We’ve already begun to see prices at the gas pump climb, and chances are it’s not a fluky trend that will reverse in the near future.
Food: Some food prices have already started increasing, but as shipping costs soar (because of more expensive fuel), those prices could climb even higher. As a sort of bonus bit of gloom, analysts are saying that chocolate prices are expected to leap upward in the coming months, thanks to political upheaval in the Ivory Coast (where 40 percent of the world’s cocoa beans are produced).
Apartments: As hiring picks back up in many industries, it seems that more people are deciding to sign leases rather than continue living with family members or friends. And others, the Wall Street Journal suggests, are upgrading as they feel more stable about their employment prospects. Naturally, this kind of movement en masse is likely to trigger higher prices in rental markets – in fact, some sources indicate that there’s a chance even middle- and upper-income Americans will find rent payments taxing in the coming years.
Houses: Another factor contributing to higher rental costs is that, despite moderate recovery in some areas of the economy, most people aren’t feeling secure enough to take on a long-term commitment like a mortgage. Other potential homebuyers may be waiting for the market to bottom out, and still others may feel that the expiration of the first-time homebuyer tax credit has left them with little motivation to buy. This wariness about buying could also be contributing to an increased demand (and thus a likely increase in prices) for apartments.
This combination of factors, according to reports, has left millions of Americans with housing costs at or above 50 percent of their household income. (Most financial advisers recommend that housing costs account for no more than 30 percent.)
With costs as high as they are, some families are left to choose between necessities: rent payments, credit card bills, food bills, utilities, medical costs, savings – when categories like this are in jeopardy, the potential for a financial disaster increases.
Is Bankruptcy an Option?
Between steadily climbing prices for necessities and continued insecurity in employment, it would be unsurprising if bankruptcy filings surge in coming months.
The good news here is that, despite the restrictions and new hurdles imposed by the 2005 law changes, most Americans who have found themselves in need of bankruptcy protection in the years since the law took effect have been able to get it.
Tuesday, May 31, 2011
Monday, May 30, 2011
What is Bankruptcy?
There are two main forms of personal bankruptcy: Chapter 7 bankruptcy and Chapter 13 bankruptcy.
Chapter 7 Bankruptcy: The Debt Discharge
Chapter 7, the U.S.’s most common form of bankruptcy, is typically filed in a federal court when an individual or business facing a great deal of debt is unable to pay it.
A successful Chapter 7 bankruptcy results in the Chapter 7 debt discharge, which eliminates the filer’s unsecured debt, such as:
• credit card debt
• payday loans
• personal loans
• utility and medical bills
Keep in mind, a person must prove eligibility to file Chapter 7 bankruptcy.
In general, that means they must typically make less than their state’s minimum income level.
Chapter 13 Bankruptcy: The Wage Earner’s Repayment Plan
Chapter 13 bankruptcy, also known as the wage earner’s plan, is often an option suitable for those facing foreclosure or looking to reorganize finances within the confines of a court-approved, debt repayment plan.
Supervised by a federal court, Chapter 13 bankruptcy gives some income-receiving debtors the ability to:
• stop foreclosure
• silence creditors
• get on a more realistic, interest-free debt repayment plan
• possibly receive a discharge from unsecured debts
At the beginning of the Chapter 13 repayment period, which normally lasts three to five years, a court-appointed trustee is assigned to an individual case and thereupon acts as the go-between for the debtor and creditors.
The trustee receives a set monthly payment from the debtor to give back to creditors regularly or as specified in the court-ordered plan.
Exceptions to these payment types are current mortgage payments and some leases. At the completion of the plan, debts are usually discharged, or legally forgiven.
Once the discharge is entered by the court, no creditor who had notice of the bankruptcy can attempt to collect debt unless it is categorized as “non-dischargeable”, examples being some forms of criminal restitution, domestic support or student loans still not paid in full.
With every year that passes after filing bankruptcy, its record on a credit report is typically viewed with less scrutiny.
Chapter 7 Bankruptcy: The Debt Discharge
Chapter 7, the U.S.’s most common form of bankruptcy, is typically filed in a federal court when an individual or business facing a great deal of debt is unable to pay it.
A successful Chapter 7 bankruptcy results in the Chapter 7 debt discharge, which eliminates the filer’s unsecured debt, such as:
• credit card debt
• payday loans
• personal loans
• utility and medical bills
Keep in mind, a person must prove eligibility to file Chapter 7 bankruptcy.
In general, that means they must typically make less than their state’s minimum income level.
Chapter 13 Bankruptcy: The Wage Earner’s Repayment Plan
Chapter 13 bankruptcy, also known as the wage earner’s plan, is often an option suitable for those facing foreclosure or looking to reorganize finances within the confines of a court-approved, debt repayment plan.
Supervised by a federal court, Chapter 13 bankruptcy gives some income-receiving debtors the ability to:
• stop foreclosure
• silence creditors
• get on a more realistic, interest-free debt repayment plan
• possibly receive a discharge from unsecured debts
At the beginning of the Chapter 13 repayment period, which normally lasts three to five years, a court-appointed trustee is assigned to an individual case and thereupon acts as the go-between for the debtor and creditors.
The trustee receives a set monthly payment from the debtor to give back to creditors regularly or as specified in the court-ordered plan.
Exceptions to these payment types are current mortgage payments and some leases. At the completion of the plan, debts are usually discharged, or legally forgiven.
Once the discharge is entered by the court, no creditor who had notice of the bankruptcy can attempt to collect debt unless it is categorized as “non-dischargeable”, examples being some forms of criminal restitution, domestic support or student loans still not paid in full.
With every year that passes after filing bankruptcy, its record on a credit report is typically viewed with less scrutiny.
Welcome to the Bankruptcy Question Blog
If you have questions about bankruptcy and whether it might be a good solution for your financial situation, this is the blog or you.
Many questions about filing Chapter 7 are addressed in this blog.
Take a look at the blog titles and click on any that you find interesting.
If you have suggestions for new post topics, or, general questions that are not addressed here, post a comment to let me know.
Cathy Church
Many questions about filing Chapter 7 are addressed in this blog.
Take a look at the blog titles and click on any that you find interesting.
If you have suggestions for new post topics, or, general questions that are not addressed here, post a comment to let me know.
Cathy Church
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