To continue in the vein of my last blog, I want to note a worrisome trend. Many people do not seem to know when it is time to file personal bankruptcy. Rather than seeking protection from bankruptcy, a substantial number of Americans who are burdened with debt have gone into what one might call a “shadow economy.” According to an article in USA Today the signs of trouble are obvious. Student loan defaults and home foreclosures are rising, and defaults on bank card loans have increased from less than eight percent in March to a little over nine percent in April, according to the  S&P/Experian Consumer Credit Default Indices. Despite these indicators of economic crises in March and April, during the same two months, bankruptcy filings decreased by four percent.

Bankruptcy is supposed to provide a fresh start to people who are in serious financial distress.  ”But only a fraction of those in serious financial distress are filing for bankruptcy,” says Katherine Porter, associate professor of law at the University of Iowa. Some of the people who are postponing bankruptcy are doing so because they hope to save money for the various fees associated with filing. But delaying bankruptcy is not good for debtors. “It’s similar to delaying going to the doctor, because you’ll just end up with more problems,” says Lawless, professor of law at University of Illinois. The system is not just more costly, it is more complex. The requirements include pre-bankruptcy credit counseling, six months of income information, and two years of tax returns. If the debtor waits to file, an attorney has to collect new information. “The paper chase gets greater, and then the fee goes up,” says William Brewer, a bankruptcy lawyer in Raleigh, N.C.

So do not wait to get the help you need. Please contact me, Kevin Heupel, at Colorado Bankruptcy Help with any of your questions. You can reach me at 303-955-7570, or COBankruptcyHelpEmail, or submit one of our free-consultation forms without any obligation. I am here to help.