Though the economy is beginning to show promising signs of improvement, many Americans are continuing to fall deeper into debt. Financial experts say that those in debt often make big mistakes while in search of financial relief.
“American consumers deleveraged after the financial crisis, but they’re starting to take on more debt again,” says Ben Woolsey, president of credit-card advice website CreditCardForum.com. In fact, the total outstanding revolving credit card debt of American consumers reached $873.1 billion at the end of June 2014, according to the latest data from the Federal Reserve, and the numbers continue to steadily increase.
Unfortunately, many consumers seeking to ease the burden of debt often make mistakes that can actually make their financial situation worse. Some examples include, taking out payday or title loans, transferring a balance to a zero-interest credit card but failing to pay off the balance when the higher interest rate begins, and borrowing from a 401(k) retirement account. In addition, paying off one creditor while failing to continue making payments on other debt is counterproductive.
Filing for bankruptcy gives many Americans the opportunity to regain control of their financial and personal life, allowing them a fresh start. Bankruptcy is common debt relief option. Statistics show that one out of every 70 households in the United States files for bankruptcy, that’s an estimated 322 out of every million Americans.
However, there are a number of myths and stigmas surrounding filing for bankruptcy that are based on misinformation. For example, financial irresponsibility is not the sole reason people file for bankruptcy. In fact, most bankruptcy filings are due to unemployment or medical related expenses. It’s important to keep in mind that the benefits of filing for bankruptcy greatly outweigh the the stigmas as well as the risks of carrying debilitating debt.
Life continues after filing for bankruptcy. Additionally, filing for bankruptcy also includes long-term financial planning advice. Many Americans feel empowered after filing, as they now have the experience and know-how to make better and more informed financial decisions in the future. Bankruptcy gives Americans the opportunity to start fresh both financially and personally, allowing them the freedom to pursue the life they’ve always wanted.