Los Angeles debt management is becoming more and more difficult‚ and L.A. consumer attorneys know that isn’t likely to change anytime soon‚ according to a recent article featured in CNNMoney.
The article breaks down the fact that basically‚ the income gap between rich and poor has been markedly increasing. That means the wealthiest are continuing to make more money‚ while the other 95 percent have seen debt levels soar and income levels that are doing nose-dives.
Rather than alter their lifestyles or curb spending‚ many people are becoming more and more reliant on credit to maintain their standard of living. This has led many into a deep hole of debt that many find it nearly impossible to dig their way out of.
It’s important to note that a Los Angeles bankruptcy can be one way of establishing a clean slate and a fresh start. There’s no shame in it‚ particularly considering so many others are in the exact same boat.
Of course‚ it’s always better to avoid a mountain of debt in the first place‚ if you’re able. (In some cases‚ especially where the cause can be traced back to an unexpected medical condition or job loss‚ people aren’t left with much choice).
Let’s take a look at the research:
Back in 1983‚ the majority of Americans had roughly 60 cents of debt for every dollar that they earned. In a disconcerting development‚ as of 2007‚ Americans had about $1.50 worth of debt for every $1 they earned.
Now compare that to the wealthiest earners. Back in 1983‚ they were accruing about 75 cents of debt for every dollar they earned. But in 1997‚ that number dropped to roughly 65 cents of debt for every dollar earned. What’s more‚ their incomes increased about 34 percent‚ compared to about 20 percent two decades ago.
So what does that mean in practical terms? Certainly‚ it means that some people are fighting off a foreclosure and have had to downsize considerably. But what economic analysts are increasingly finding is that rather than do that‚ Americans are just racking up more debt so they won’t have to downsize. They’re swimming in debt racked up from their house‚ car‚ student loans and credit cards.
Many Americans have been successful in shedding their debt‚ albeit through means of foreclosure and bankruptcy‚ the report says. Sometimes these are good solutions for your financial situation‚ sometimes not. It’s important to consult with a Los Angeles debt management attorney before making any decisions.
Some general things to keep in mind if you’re trying to reduce your debt-to-income ratio:
- Think about what the real issue is. For example‚ if you’re retired and thinking about taking out a reverse mortgage‚ maybe instead start thinking about if you may need to downsize your current home.
- Try to avoid robbing Peter to pay Paul. For example‚ don’t drain your 401k to pay off your credit card debt. That’s going to mean you may have to work much longer before you can retire.
- Consider an attitude shift in your spending habits. If your credit card debt is unmanageable‚ bankruptcy is one option.
If you are considering filing for bankruptcy‚ contact Los Angeles bankruptcy attorneys at Cal West Law to schedule your free consultation. Call (800) 568-0707.
Debt inequality is the new income inequality‚ By Tami Luhby‚ CNNMoney