Oftentimes when economists and pundits discuss bankruptcy, it's in terms of figures and numbers. But what does the human face of bankruptcy look like? Who are the people that depend on the second chance that bankruptcy offers?
Let's take a look:
- Families who file bankruptcy often have one or more people in the household working (or not working) a job that doesn't pay enough to cover their debts and daily living expenses. Maybe they have recently been laid off or lost a wage earner through layoffs. Whatever the case for their inability to earn enough, it is the lack of income that usually puts them on the path towards bankruptcy.
- Many families who file bankruptcy have a home that is facing imminent foreclosure. Usually they can't pay their mortgage because of a lack of income or because their mortgage's interest rates have shot up so high that it renders payments unaffordable. And to add insult to injury many homeowners facing foreclosure who seek bankruptcy protection are unable to sell their home because the value of the property has sunk significantly.
- Many families filing bankruptcy are facing one or more lawsuits by creditors, usually credit card companies. In their efforts to avoid foreclosure, bankruptcy and to stay afloat financially, many families use credit cards. Their logic is that they will eventually get back on their feet and repay the debt; but the debts just pile on until they are facing a creditor lawsuit and must file bankruptcy.
- Most families filing bankruptcy have always done so as their last option when all other plans have failed. This fact lays waste to the assumption that families filing bankruptcy are just trying to escape personal responsibility. That couldn't be further from the truth.