Bankruptcy Can Help The Middle Class With Debt Problems
You did what you were supposed to do in life.
You went to school. Got a job. Earned decent wages.
Worked hard. Started a family.
Maybe you’ve even managed to put a child through college.
You paid your bills on time, one way or another.
But now you owe a lot of money that there’s just no way you can pay back and you simply cannot afford to keep making payments.
It Was Easier Before…
In the “old” days (about 30 years ago), real hourly wages–meaning wage rates adjusted for inflation–kept pace with cost of living increases. But that all peaked around 1972 and, since then, the average hourly wage has been flat, while costs of food, housing and other necessities have skyrocketed.
Thus, purchasing and maintaining a home and a family–heck, just surviving–while being able to build up a savings, has gone the way of the Dodo Bird.
And so has what’s left of the Middle Class.
Tell me if any of these apply or sound familiar to you:
- Are you “financially fragile” or “financially impotent”?
- Are you working more hours, but having less available money?
- Are you stressed about your money situation?
- Do you have less than $400 available to pay for emergencies (without having to borrow or sell things)?
- Do you feel ashamed about your situation?
In a very well written article posted online in The Atlantic magazine, titled “The Secret Shame of Middle Class Americans”, author Neal Gabler admits and explains that he and 47% of Americans are in that same boat financially.
And many of these are people who, by all objective accounts, appear reasonably prosperous.
So the good news is, you’re probably not alone.
Of course, that is also the bad news for our society as a whole.
Borrowing To Survive
Unless you are willing and able to live a “Ghandi-like” existence, there is incredible pressure to achieve status and a standard of living which is becoming increasingly difficult in today’s economy.
As the Gabler article points out, people like Donald Trump feed this pressure: “America is a country of winners and losers. Which one do you want to be?”
And so we all plow ahead trying to attain what each of us deems is our acceptable lifestyle and doing our duties with an ever-decreasing real wage.
And we borrow.
Because that’s how we survive.
Of course you intend to repay the debts that you borrow. And for a while–sometimes many years–payments are made timely.
But it just takes one little problem–a pebble under a speeding train’s carriage, to derail your entire financial situation.
Maybe the wage increase you were hoping for didn’t come.
Or someone in your family gets sick beyond what your health insurance covers.
Or your car explodes.
Or, God forbid, you take a calculated risk on a business venture that doesn’t work out.
And so on…
For most, we are all one pebble away from collapse.
And that is where bankruptcy comes in.
Bankruptcy: The Great Equalizer
What Bankruptcy Won’t Do
It’s not going to create more income for you.
It’s not going to help you manage your money better.
It won’t put your kids through college or fix your relationships.
What Bankruptcy Can Do
It can eliminate your obligation to pay on certain debts giving you breathing room and a fresh start with your finances–legally.
It allows you to remove involuntary liens (such as from judgments) against real estate and sometimes junior voluntary liens.
It allows you to get out of burdensome leases and contracts (like that car you paid too much for) and enables you to enter into new ones.
It can help fix or improve your credit. (yes, I really said that)
It can allow you to catch up on past due mortgage and other secured debt payments over time.
Sometimes you can do all these things in a Chapter 7 case without having to make any further payments to your unsecured creditors.
Other times you can do a repayment plan in a Chapter 13 or Chapter 11 case of anywhere from 0-100% of your debts (at zero percent interest) depending on numerous factors.
Conclusion: Take Advantage Of Available Bankruptcy Help
It is hard to survive these days, even for those who work hard and play by the rules.
We are told to feel ashamed for not achieving a standard that is becoming less possible to reach every day.
I do not advocate trying to “keep up with the Joneses”, but take comfort in knowing that there is a legal way for you to obtain some relief.
The Constitution allows this.
If you fail to utilize a legal resource like bankruptcy you are making your life harder than it needs to be.
And these days, most of us in the middle class need all the help we can get.
And you can do so without shame.
Feeling Guilty About Bankruptcy
Image Courtesy of Robin Davies