New Jersey readers who are in debt know how easily debt balances can accumulate, leaving an individual facing personal bankruptcy or other difficult financial decisions. While a personal bankruptcy filing can be a viable option, it may be important to understand why it is common for many Americans to struggle with overwhelming debt. Sometimes, the reasons behind this are related to socioeconomic circumstances.
After emerging from the most recent financial crisis, wealthier Americans are paying for many things in cash. This includes tuition fees and a multitude of other expenses. However, lower-income workers rarely have the option of paying for things in cash. These workers have seen little to no increase in their income, but have struggled to keep up with rising prices of everything from higher education to groceries. Consequently, more of these individuals are going into debt in order to afford what are known as "non-discretionary" expenses.
Many lower-income Americans find themselves paying for college tuition and other necessary expenses with credit cards or student loans. In this same socio-economic group, car loans are inevitable when a vehicle needs to be replaced and credit card use is common to pay for food and gas. These are all types of debts that are considered "normal," yet can lead to an unmanageable debt burden for those who do not expect an increase in income levels.
Filing for personal bankruptcy may not sound like an ideal option for many New Jersey residents who are struggling with debt. However, bankruptcy protection can halt creditor harassment and other negative consequences of debt as outstanding balances are discharged over time. In fact, this may be the best option for finding debt relief and eventual financial freedom.
Source: marketwatch.com, "Americans are getting into debt to afford food, gas", Peter Atwater, June 19, 2014