It's not your imagination: Families are actually poorer than they have been in years.
The Federal Reserve reports not only are we making less, but overall we owe more, spend more and save less.
That's exactly the kind of scenario for which a Chapter 7 bankruptcy was designed.
Orange County Bankruptcy Lawyer Vincent Howard understands that a lot of people wait until long after they should before reaching out to learn about filing, in part because they are embarrassed or feel they have somehow failed. What this report indicates is that it is something almost everyone is dealing with right now.
The New York Times recently reported on the issue, delving into what the numbers actually mean. What they found was that a family who was smack in the middle of American net worth levels was about $50,000 poorer than in 2010 than they were three years earlier. So in 2007, just prior to the first waves of the Great Recession, that family's net worth would have been a little more than $126,000. But in 2010, it had plummeted down to little more than $77,000.
Then we look at the income levels. In 2007, the median stood at higher than $49,000. Three years later, it was down to $45,000.
That brings us to savings. The report indicates that five years ago, there were just 57 percent of families who had accrued any savings at all. That's not great, but it was better than in 2010, when just 52 percent of families have managed to save. What that means overall is that people are in a much more vulnerable situation when it comes to paying for college, buying a home or retirement. That can mean that one unexpected life setback can send them into a financial tailspin.
So their wealth has declined, they're not earning as much so they aren't able to save. And yet, they're spending more, percentage-wise?
Part of that is the attempt to maintain a familiar lifestyle. Rather than try to scale back, people want to hang on to the life they've known. The problem is, because their incomes have shrunk, a lot of that spending ends up being on credit. That means that not only is their wealth, income and savings dwindling, but their debt is continuing to balloon.
Miss a payment or two, and the late fees and higher interest rates become nearly impossible to overcome.
This is where a Chapter 7 bankruptcy can make the difference. Not only will it give you breathing room from your tenacious creditors, it basically gives you a chance to start over. You can rebuild your credit with a fresh slate, knowing what you know now, living within your means and working toward a more stable, personal economic future.
Orange County Bankruptcy Attorney Vincent Howard at Howard Law can help. You can reach us toll-free at 1-800-872-5925 or send us a message online.