Although the recession may officially be over, many New York residents and others across the country are still dealing with the lingering effects and continued financial challenges. Many people struggle for a short time and then regain their financial footing, while others seem to fall further and further behind as the result of snowballing, unfortunate circumstances. When debt rises and people are unable to make their monthly payments, may find themselves dealing with harassment and stress from a collection agency.
A study recently released by the Urban Institute revealed that more than 35 percent of Americans have been reported to a collection agency for a failure to pay bills. The debts and financial obligations that result in these referrals to collection agencies include credit card bills, mortgages, student loans, automobile loans, hospital bills, and even cell phone contracts, among others. The study indicated that this rate of being reported to a collection agency has remained at the same level over the years, despite overall decreases in the average amount of credit card debt held by Americans since the recession ended in mid-2009. One researcher from the Urban Institute hypothesized that unchanged levels of income explain why repaying debt continues to be a problem despite overall reduced levels of debt.
When analyzing a person’s financial situation, it is important to realize that many different factors are involved in creating the circumstances leading to whether a person is able to repay debt or not. For many people, previously manageable payments become unmanageable only when something unexpected — like a serious accident, a critical illness or job loss — occurs. In addition to the general stress resulting from the financial strain, many people will also experience harassment from debt collectors. In these situations, it is wise to investigate the option of personal bankruptcy as a way to get out from under crushing debt, obtain relief from debt collectors, and regain financial stability.
Although bankruptcy may be the best option for some consumers, other options can be effective for other consumers. Alternatives to bankruptcy include informal methods of debt resolution that may consist of requesting lower payments or an extended repayment schedule from creditors. If those options prove to be insufficient, ineffective, or not viable, however, personal bankruptcy can provide a way for those struggling with serious debt to use their assets to eliminate or discharge debt for a fresh start.
Source: Newser, “More than a third of Americans reported to collection agencies for unpaid bills and debts,” Josh Boak, July 29, 2014
