Even though more Americans are piling on debt, fewer are seeking help in trying to get their finances back on track. Poverty in this country has increased, unemployment rates continue to hover around 9% according to the U.S Department of Labor, but when you add in the underemployed and the discouraged the figure is closer to 17%. Meanwhile according to a new study by CardHub.com consumers have accumulated $18.4 billion more in credit card debt in the second quarter of 2011 than they did in the first quarter. That is up 66% from the same quarter in 2010.
Yet, despite the increased spending and the decrease in income or for that matter employment, fewer people are seeking bankruptcy relief. Bankruptcy filings are down 15% nationally in 2011 from the same time period in 2010. clearly, people need financial help more than ever but aren’t seeking it, so what gives?
My feeling and the feeling of many other bankruptcy attorneys that I have spoken with is that many people just don’t care anymore. That they have surrendered to their situation. That things have gotten so bleak many people don’t even want to deal with the issue or acknowledge the problem. Many are just concerned with putting food on the table and keeping the lights and heat on, not with dealing with putting a stop to creditor harassment and collection activity.
The government has also contributed to the general apathy. For starters, the HAMP and HARP loan modification programs have in general been major failures with far fewer loans actually being modified by mortgage companies than was expected. However, one unintended consequence of the program is that it has been successful in extending the time it takes mortgage companies to complete a foreclosure. Mortgage companies are required to put foreclosures on hold once a customer has been accepted into one of the modification programs. Thus, due to the general run around that mortgage servicers put customers through when trying to modify a loan, many people are in the HAMP process for 6 months or even a year before a determination is made. This means that the foreclosure is delayed for that period of time, which lets these homeowners stay in the homes that much longer without making a monthly payment.
This coupled with the moratorium placed on foreclosure proceedings in many states due to the bad record keeping of many mortgage companies has provided a situation where many homeowners have not made a mortgage payment in more than a year or two without a foreclosure complaint being filed. This has created a situation where homeowners have become apathetic with regard to an impending foreclosure because frankly they haven’t been served with a complaint. Thus, many homeowners, who otherwise would have acted to try to save their home are not doing anything for the simple reason that they haven’t had the pressure of a pending foreclosure to force them into action.
Also, many people have a “bailout mentality”, in the sense that they have lost their jobs and are counting on their unemployment benefits to continue to be extended so as to keep paying their bills. Again once those benefits end, if suitable employment hasn’t been found, the bills will remain with no means to pay them.
So what to do? The answer is to not wait for something really bad to happen, like a foreclosure complaint being filed or a bank account being levied. Be proactive and take action now, consult a bankruptcy attorney, get the creditors off your back now and start working towards the discharge of your debt. This way, when things do turn around for you, you are in a position to move forward in a positive manner, rather then being dragged down by the overwhelming debt and the stress that debt brings with it. A bankruptcy discharge will give you that fresh start that you need. It will allow you to sleep at night and to move forward by making decisions that benefit your financial future.