Your Money Matters: Bankruptcies Are On The Rise And Experts Warn Against Delaying Action

Personal bankruptcies have risen 16% compared to last year, highlighting ongoing financial struggles for many Americans. News On 6's Dave Davis shares why experts say delaying action can exacerbate financial challenges

Friday, November 29th 2024, 4:17 pm

By: News On 6, Dave Davis


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Personal bankruptcies have risen 16% compared to last year, highlighting ongoing financial struggles for many Americans.

Experts caution that waiting too long to file for bankruptcy can exacerbate financial challenges and delay access to critical protections.

Warning Signs of Financial Trouble

Research from the Consumer Bankruptcy Project indicates two-thirds of individual filers endure debt challenges for up to five years before seeking help. Key red flags include:

  1. Using pension or retirement funds to pay debts, which are often protected in bankruptcy filings.
  2. Borrowing money to cover day-to-day expenses.

Understanding Bankruptcy Options

Filing for bankruptcy typically requires legal assistance. The two most common types include:

  1. Chapter 7: Costs around $1,500 upfront and eliminates most debts quickly.
  2. Chapter 13: Allows payment plans over time but is more expensive overall.

Expert Advice

Robert Lawless, a professor at the University of Illinois Chicago, emphasizes that bankruptcy eliminates debt but does not create income.

“Finding a better-paying job and changing spending habits should be part of the equation,” Lawless said, urging individuals to focus on long-term financial stability alongside bankruptcy protections.

Key Takeaway: Addressing financial struggles early and seeking professional advice can help individuals regain financial footing.

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