Start Fresh Today Bankruptcy Blog

The Middle Class Forced into Bankruptcy by Burdening Consumer Debt

Posted on 8/24/12 8:00 AM

A recently published book, “Broke: How Debt Bankrupts the Middle Class,” uses data to show how consumer debt is undermining financial security and prosperity among the middle class. As a matter of fact, research revealed that “1.5 million households filed for bankruptcy in the last year, making bankruptcy as common as college graduation and divorce.”  Edited by Katherine Porter, the book analyzes information gathered from bankruptcy cases filed in the first few months of 2007. Chapter 1 of the book contains some interesting findings and conclusions, including the following:

  • More than 90% of bankruptcy filers are in the middle class (page 10
  • The bankruptcy system is expensive and complicated (page 13)
  • Debtors who file for bankruptcy without attorneys do worse than those with attorneys (page 14)

The Bankruptcy System is Complex

The book’s data concluded that three major life events were commonly experienced prior to bankruptcy: employment problems; illness or injury; and divorce or the death of a spouse. If you are experiencing some or all of these events and are struggling under increased consumer debt, you might be considering bankruptcy. If so, you need to approach it in the manner most beneficial to you and your financial situation.

The bankruptcy system is complex, requiring the completion of extensive paperwork. The book observed that even in the simpler Chapter 7 bankruptcy, debtors without attorneys were 10 times more likely to not receive a discharge of their debts. For Chapter 13 debtors without attorneys, most were likely to suffer dismissals of their cases without any debt relief. Make sure to hire a bankruptcy attorney who can guide you through the complicated bankruptcy system. Don’t know where to find a bankruptcy attorney? Use our free Attorney Locator to find an attorney in your area.

You will need to complete required bankruptcy courses prior to filing for bankruptcy and before your debts are discharged. We offer U.S. Trustee-approved bankruptcy courses online or by phone and in English or Spanish. Upon completion, your credit counseling certificate and debtor education course certificate are immediately delivered to you and your attorney. For more information on what you can expect from the required bankruptcy courses, download our free bankruptcy course guide.

Improving Your Financial Situation after Bankruptcy

Another startling conclusion of the book was that it was harder for people to maintain their middle class status with continued mounting debt. We want you to successfully manage your debt and regain financial stability after bankruptcy. It’s not easy but our Financial Success Kit has tools and resources to help you overcome debt and become financially healthy again by rebuilding your credit and managing your finances.

We Help Consumer Bankruptcy Attorneys Manage Their Clients

We assist bankruptcy attorneys with their required due diligence by offering bankruptcy courses and integrated bankruptcy software all in one place. This allows attorneys to order the required bankruptcy courses for their clients directly from the attorneys’ own software and monitor their clients’ online bankruptcy course status. We also provide an attorney resource page containing local bankruptcy court rules, forms, and state exemption laws.  

Source: “Broke: How Debt Bankrupts the Middle Class,” Edited by Katherine Porter, 2012

Tags: Bankruptcy and the Economy

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