Filing bankruptcy has become so common that just about every American knows someone who is filing or has filed in the past. All the way up until 2008, most Americans lived way beyond their means on credit. Credit card companies were willing to loan large amounts to people that really shouldn't qualify. This free money or that's what people thought at the time, continued to roll all the way up to the financial meltdown in September of 2007. All of a sudden, creditors took back any available balance left on someone's credit cards and closed accounts that seem to be in danger of failing. Fast forward to now, creditors are once again starting to loan the free money has the Fed continues to print more and push it out to the banks in hopes of avoiding a depression.
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Immediately following the credit crunch, the US saw a large number of Americans filing for bankruptcy that continued on increasing until 2010 at 1.6 million bankruptcies filed. The number in 2011 dropped to about 1.5 million and the estimated amount at the current rate for 2012 will be 1.3 million. The common folk think that a disaster was averted, but in reality another bubble is being created. The unemployment rate has been above 8% for three and half years and this is starting to look like the new normal. Since credit has loosened up, many people are able to kick the can down the road and stay away from the inevitable bankruptcy filing. Smart money is now predicting that this just might be the calm before the storm.
No need to fear though, if you get caught with your pants down you can always file for bankruptcy. That is if you can qualify to file Chapter 7 bankruptcy, but if not there is always Chapter 13 for those that have decent jobs. With all this volatility in the credit markets, creditors have become very aggressive in their collection tactics. Many creditors are now quick to close accounts, package and sell off any customers that are getting behind to cut their losses and move on to greener pastures. The problem lies with the customer who ends up having to deal with a second rate debt collection company that bought the debt for pennies on the dollar. These characters used unscrupulous tactics by threatening, intimidating and lying to the consumer about what will happen to them if they don't kick down some cash immediately. These are the same bone heads that are quick to sue an individual before they can file for bankruptcy. Since they bought the debt for almost nothing, they really have nothing to lose. So they try to get the person into court and get a judgment against some hoping to start a wage garnishment and get their money back. They know that filing bankruptcy will stop a wage garnishment, but it will usually take a couple pay periods before it will go into effect giving them a substantial amount of money.
Before this happens, the American consumer needs to be aware of the tactics by staying on top of their finances and consulting a bankruptcy attorney when things get shaky. Burying your head in the sand and waiting till the last minute is not an option. The last thing a family needs when they're down on their luck is to get hit with a lawsuit that might be costly.
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