Dallas, TX (PRWEB) November 24, 2011
Allmand Law has watched the face of bankruptcy change from lower-income to more middle-class as the economic recession continues. But the irony of this change is that many middle-class debtors find themselves stunned by changed financial circumstances and are reluctant to file a necessary bankruptcy, according to Allmand Law’s managing partner Reed Allmand.
“What we’re seeing right now is an influx of debtors who are at the midpoint of their lives and have never experienced serious financial hardship before. Now they are facing long-term unemployment and bleak economic prospects because of the general downturn in the economy,” Allmand says.
According to Allmand, the new face of bankruptcy is usually:
Middle-Class: They have college degrees and have been fully employed prior to the recession. These bankruptcy filers are surprised by the change in their financial circumstances and even more surprised when that change lasts for a year or more.
High Debt, Few Assets: While the housing boom flooded the nation with cash, it also inundated it with debt. According to the Federal Reserve’s July 2011 report, the average American household has over $15,000 in credit card debt. Houses, which some middle-class Americans buy as a way to build wealth, are now strangling some debtors because they are worth significantly less than the mortgages on them. Many debtors seeking the assistance of Allmand Law to file bankruptcy have housing debt which dwarfs the actual value of their property, according to Allmand.
Forced To Downsize: After a year or two of looking for employment or facing underemployment, some debtors seeking the assistance of Allmand Law are desperate to downsize both their debts and lifestyle. Filing bankruptcy gives them an opportunity to surrender pricey property and discharge unsecured debts which they can’t pay. For many of these bankruptcy debtors, the opportunity to downsize brings both financial and psychological relief.
“One debtor’s comment is particularly memorable. After signing the documents to file bankruptcy, she turned to us on the verge of tears and said that filing bankruptcy was like lifting 15 pounds of worry off her shoulders,” Allmand says.
Reluctant Debtors: While popular culture sometimes paints bankruptcy filers as either low-earning “slackers” who overspent or high-rollers who took one too many risks, Allmand insists that the new face of bankruptcy is the debtor who is reluctant to file.
“They want to pay their debts. They want to pay their debts so badly that many place themselves at risk by liquidating retirement accounts, dropping health insurance or even paying credit cards instead of their mortgage. That’s a mistake; but that’s just how desperate they are to avoid bankruptcy,” Allmand says.
Reed Allmand is Board Certified in Consumer Bankruptcy by the Texas Board of Legal Specialization, the managing partner of the law firm Allmand Law and NACBA’s State Chair for the Northern District of Texas. He has been practicing bankruptcy law for nearly 10 years and has handled more than 3,000 bankruptcy filings. Allmand has appeared on “Money for Breakfast” on Fox Business News and is the author of “The Truth about Bankruptcy.” To speak with Mr. Allmand or to schedule an interview, please call (214) 265-0123.