Thomas F. Miles, Attorney and Counselor at Law
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Does the American Way lead some to file for bankruptcy?

There can be no doubt that Americans take on high levels of debt. As a nation, we have come to believe that it is not only "normal" to borrow money, but that it is the only way to attain the things that we both want and need. Some feel that this comfort with debt has led to something of a debt crisis for many California families, and a resulting need to file for bankruptcy.

Statistics show that the average American household brings in just under $52,000 per year. The average mortgage sits at $169,000, and auto loans account for an additional $27,000. Households with student loan debt can carry an average of $48,000 owed, and credit card debt layers an additional $16,000 of debt into the budget.

That means that for many households, more than half of all monthly income is going right back out again in the form of debt service. While this scenario may work out for many years, cutting things so close to the wire can leave families exposed to many different risks. For example, if a sudden job loss, illness or injury should occur, those who have very little left over each month would be hard-pressed to continue their current lifestyle.

When finances become strained, the end result is often to prioritize monthly bills and to let some obligations fall to the wayside. This can lead to a spiral effect in which interest rates rise, fees and fines accrue, and balances stay the same, if not increase. In a very short period of time, finances can become so unbalanced that the only way to regain stability is to file for bankruptcy. Some in California believe that such an outcome lies in society's acceptance of high levels of debt. For those affected, however, the cause is of far less concern than the cure.

Source:, "The Seeds of Revolt: American Families Owe Trillions of Dollars in Debt They Can't Pay Off", John Hayward, May 18, 2016

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Thomas F. Miles, Attorney and Counselor at Law
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