Last year, less than 800,000 people filed for bankruptcy throughout the country. At first glance, that seems like a lot, but in reality the number of filings for 2016 was the lowest for any year since 2006.
Although filings appear to be in the decline, thousands of people throughout New York continue to seek bankruptcy protection when their debt levels surpass their ability to pay. Here are five of the main forms of debt that these people struggle with until they file for Chapter 7 or 13.
A 2013 study pinpointed medical debt as the top reason why people file for bankruptcy in the United States. According to the Kaiser Family Foundation, over 25% of adults struggle to pay their medical expenses, even when they have insurance. In 2016, the New York Times reported that 20% of people under the age of 65 had trouble with medical debt, and out of this group, 63% used all or most of their savings to pay healthcare bills.
Statistics suggest that Americans owe more than $1 trillion in credit card debt, with the typical family owing $8,377. The average household credit card debt is on the rise, having jumped 6% in the past year, and is now matching its height during the Great Recession.
In New York State, the average credit card debt per household was $6,256 in 2016, which is slightly lower than the $6,423 reported in 2010.
Student loan debt
Student loan debt is a staggering economic burden not only in New York, but across the country. In 2015, the nationwide total was an estimated $1.2 trillion, up more than 150% from 2006. In New York State, the amount owed in student loans has more than doubled in the last decade, as have the number of borrowers. As of 2015, New York residents with student loans owed an average of $32,200, which is above the national average of $29,700.
New York has emerged successfully from the financial crisis of 2008, but there are still hundreds if not thousands of homes throughout the state that are at risk of being foreclosed upon. Filing for Chapter 13 bankruptcy can prevent a home from seized by the bank, which is welcome news for many: according to the Federal Reserve Bank of New York, about 79,000 people had a new foreclosure notation added to their credit reports between October 1 and December 31st of last year.
If you are considering bankruptcy for these and similar reasons, then it is important to reach out to an experienced New York bankruptcy attorney to weigh your options. After a thorough evaluation, your attorney can help you through the process so that you get the fresh start you need.
Jayson Lutzky has helped many clients while practicing law for more than 34 years file for bankruptcy protection. He files Chapter 7 petitions, which wipe out most debts, allowing debtors to get a fresh financial start. Mr. Lutzky offers free in-office initial consultation and can be reached at 718-329-9500. Saturday appointments are available.