One of the major causes for people who file bankruptcy is the inability to budget their finances. Over the last 10 years, many Americans have gotten themselves into financial trouble because of the unlimited credit being given to them. It’s easy to spend, spend, spend when creditors keep increasing available balances as long as the debtor can make the minimum payment. What happens is, it creeps up on an individual and before they know it they don’t make enough money to pay the minimum payments. This is when some start taking out cash on one credit card to pay another. It’s just a matter of time before they end up filing for bankruptcy.
When the credit market almost collapsed back in 2007, creditors were quick to remove available balances on debtors. They were afraid they would be hung out to dry because of the amount of credit card debt that Americans were carrying. Throughout 2008, credit was hard to come by until the Fed used quantitative easing to push money out to Federal Reserve Banks to help the economy. Banks started loosening up the credit market that put people further in debt but helped the economy a little bit. Currently, the Fed knows that they can’t grant money for ever and has been talking about tapering. This will bring inflation and crush those that live on credit. If anyone thought 2008 was bad, that was nothing compared to what is coming.
As Americans continue to live beyond their means, many are expecting a large number of Americans having to file bankruptcy in the next few years. What goes up must come down and the US economy fits the gravity model. The amount of money that Americans are making is continuing to decline as the amount of debt continues to rise. The only one that’s going to benefit from this mess is the bankruptcy attorney. The mainstream media continues to pump up the economy as the Dow sets all-time high records and precious metals get smashed. None of this adds up and makes many Americans question the truthfulness of the government. For the average Joe, if it wasn’t for available credit, food stamps and other social programs, many would be living on the streets. As the economy tightens, Americans need to rein in their spending. The days of living like a rock star on $50,000 a year are gone and will never return. It’s time to get out of debt even if it means filing bankruptcy.