The good news for debtors in the United States? Bankruptcies were down in 2014. In fact, with approximately 900,000 total personal bankruptcy filings in 2014, America saw a decline of about 12% from 2013. As 2015 begins, it appears the country will continue to see fewer filings--perhaps an additional 12% fewer. However, if you are trying to dig out from under overwhelming credit debt, you may not exactly be rejoicing with your financially healthy fellow citizens. Don't give up hope: there is good news for you, too! Bankruptcy filings are declining because of the improved job market, which may just be to your benefit.
Signs of a stronger economy
Last year, not only did unemployment filings decrease, but many new jobs became available; in December 2014 alone, 240,000 jobs were added to the economy. Also, 13 states raised their minimum wage last year, which has spurred job growth. Lastly, the cost of gasoline has plummeted in recent months, which is always considered a good economic sign.
Reconsider your debts
In the light of what appears to be strong economic recovery, you may want to re-evaluate your debt picture. It just may be that you can avoid a Chapter 13 bankruptcy by taking on a second job, establishing a firm budget, and/or using the assistance of a credit counseling agency,
Start with taking inventory of your financial situation. Answer the following questions:
How much is your total debt?
How far behind are you on payments?
How much can you comfortably pay toward your total debt each month?
If there is not a huge disparity between the amount of money you owe on your credit accounts each month and your take home income, you are in a good position to handle your debt without declaring bankruptcy.
Alternatives to bankruptcy
The first thing you might consider to get a handle on your debt is taking on a second job. This is easier to do now than it was just a few years ago. If you dedicate the income from a second, part-time job to paying down your debt, you will be surprised at how quickly you can reduce it to a manageable level. Although it is difficult to take on additional work hours, the fact that it might spare you a bankruptcy is motivating. Set a reasonable time frame during which you will maintain the job, perhaps six months or a year, and keep your perspective: it's temporary.
Next, look into using a credit counseling agency. These nonprofit agencies offer a variety of services to help consumers regain financial stability. Workshops include
how to devise a reasonable budget
how to save money
how to use credit wisely
A credit counseling agency can also work with your creditors to renegotiate your debt. Known as a debt management plan, this renegotiation pools all of your credit accounts into one, on which you make monthly payments until it is paid off. Creditors will often waive interest for the duration of the plan. Because fewer people are declaring bankruptcy these days, creditors may be more amenable than a few years ago to accommodate slow repayment plans.
Lastly, consider debt consolidation. This involves taking out a new loan, large enough to pay off all your existing credit accounts--which you then close! Like a debt management plan, debt consolidation allows you to make one payment a month instead of many. However, it is not for everyone, as it is highly dependent on your willpower. You must have the self-control not to open any new credit lines until the loan is paid in full, or you may end up in bigger trouble than when you began. Because credit companies are experiencing fewer consumer defaults, you may still be able to get a loan even though you are behind on other credit accounts.
Because of the anticipated upswing in the country's economy, you may be able to avoid bankruptcy this year by trying these lesser options.
However, if you find that the disparity between your debts and your income is simply too large for these options to succeed, call a bankruptcy attorney. A free consultation will give you excellent legal advice about your particular situation, which may include the option of filing bankruptcy.