Most Americans, including Arkansas residents, strive to have sufficient resources to live comfortably while maintaining a healthy savings cushion that will cover unexpected financial emergencies. However, the Federal Reserve reports that nearly half of American households do not have enough savings to cover even a modest expense of $400 that could unexpectedly arise. This is partly due to a current economy marked by rising prices alongside stagnant earnings. For some consumers, bankruptcy may be the best way to eliminate the crisis and begin again with a fresh start.
Those making about $23,000 to 41,000 are reportedly hardest hit by the slow economy. Persons and families in that range generally suffer the highest interest rates and the poorest terms on their debt transactions. They are more inclined to turn to high-priced payday loans and credit cards in times of need. Those who make between 41,000 and about 100,000 are also vulnerable, depending upon circumstances such as family size, prior accumulated credit card debt, medical crises, educational expenses for children and similar budget-busting factors.
Experts generally say that if a person or family will be unable to reasonably pay off its unsecured debt within five years, then bankruptcy is a strong option. This doesn't apply to reasonable secured loans, such as mortgages and car loans. However, when medical bills, credit cards, payday loans and other unsecured debt becomes so burdensome that it can't be reorganized and repaid in the five-year span, then the consumer will need to break the cycle with more substantial measures.
Whenever a debt consolidation or debt relief plan will continuously leave the debtor struggling desperately to provide shelter and food, then debt elimination through bankruptcy is the most prudent remedy for most people. In Arkansas and elsewhere, this is always a matter that is best reviewed and discussed with an experienced consumer bankruptcy attorney. Each family's budgetary factors are different, and each case is best evaluated with professional assistance to determine if it is qualified and appropriate for bankruptcy relief.
Source: wtop.com, "The recipe for building wealth hasn't changed", Liz Weston, July 25, 2016