Chicago, IL (PRWEB) November 30, 2010
The recent economic crisis has hit many American families hard and as Fonfrias law group reports, buying things on credit, aka buying things "on time" is a nasty habit that is costing hardworking, cash-strapped American families a fortune. For some individuals, buying on credit has even become an addiction. According to Richard G. Fonfrias, J.D. of Fonfrias Law Group, LLC (http://www.chicagomoneylawyer.com), a leading Illinois bankruptcy and financial rescue lawyer, our continuing reliance on credit to purchase items that we can't afford is causing bankruptcies to skyrocket from which there are no signs of relief in the near future.
"Interest, whether charged on a credit card or an installment loan, is expensive and, if left unpaid to accumulate or compound, can cost you a fortune," says Fonfrias. "A person with a $3000 balance on his credit card, paying an interest rate of 19% with a minimum monthly payment of 2.5% of the balance and no additional charges will pay $75 a month minimum. By paying only the minimum payment month after month, it will take this person 283 months to pay off that one debt -- more than 23 years and it will cost him $4,729.44 in interest charges! This for just one credit card with a $3000 balance! What is particularly alarming is that most Americans have 6-10 credit cards," explains Fonfrias.
Buying on credit can cause all sorts of problems, especially for people already in debt. Credit purchases can choke the life out of the buyer until they are paid off. Interest charges increase the final cost of an item bought on credit. Credit card debt and installment loans raise the amount of money needed to pay monthly bills. When left to accumulate and grow, the debt becomes so big that the buyer can no longer pay it off. Easy credit, mounting credit card debt and "on-time" installment purchases are causing bankruptcies across the county to soar to record levels.
Expensive medical bills are another serious problem that forces many into bankruptcy. Unaffordable medical bills resulted in half of the 1,458,000 personal bankruptcies in 2001. According to a study carried out by researchers at Harvard Law School and Harvard Medical School and published in the journal Health Affairs, medical bankruptcies impact 2,000,000 Americans each year, including debtors and their families. While over 75% of these families had health insurance when the illness began, 38% lost coverage -- some only temporarily -- by the time they filed bankruptcy.
Before filing for bankruptcy, many families endured some hardship: 30% had at least one utility cut off and when medical care was needed, 61% chose to go without. The bankrupt families were mostly middle class. 56% owned a home and 56% attended college. Often, illness forced income-earners to take time off work, resulting in lost income and lost health-insurance benefits
According to Chicago bankruptcy lawyer Richard Fonfrias, declaring bankruptcy may be the best course of action for those facing overwhelming debt. "If the buyer/debtor cannot work out an affordable plan to get out of debt, I suggest he consider Chapter 7 or Chapter 13 bankruptcy. Chapter 7 (liquidation) erases most of the person's debt. And Chapter 13 (repayment) allows the debtor to negotiate a payment plan with creditors and then, with the Bankruptcy Court's approval, start paying down his debt. It's very important before taking any action to talk to an experienced financial rescue and bankruptcy lawyer in order to get the best financial advice," say Fonfrias.
Richard G. Fonfrias, J.D.
Fonfrias Law Group, LLC
First National Plaza
70 West Madison, Suite 1400
Chicago IL 60602
About Fonfrias Law Group: Ready to assist homeowners in serious financial trouble and consumers faced with unmanageable debt, Richard Fonfrias of Fonfrias Law Group invites your questions about Illinois bankruptcy, foreclosure, credit card debt, loans, tax liens or other financial concerns. With eighteen offices serving Illinois, California and Florida, the Fonfrias Law Group is Chicago's experienced financial rescue and bankruptcy legal team, offering financial legal services including, bankruptcy, tax defense, debt consolidation, bad credit repair, foreclosure defense, credit card debt management, loan and mortgage refinancing advice. For more information call 312-969-0730 or inquire on line http://www.chicagomoneylawyer.com