Living paycheck to paycheck is a financial reality for many people. According to PYMNTS, a company that monitors digital payment method trends and other financial matters, 63 percent of U.S. consumers lived this way in November 2022. While it’s a situation many find themselves in, its risks are often underestimated. Among these risks, the increased potential for bankruptcy looms large.
Not having a financial cushion exacerbates the issue. MetLife states that 55 percent of workers live paycheck to paycheck, and a troubling 52 percent don’t have a three-month savings cushion. Bankrate reveals that 57 percent of Americans don’t have enough savings to cover a $1,000 emergency expense, and one-third can’t save money at the present time. This may increase bankruptcy filings as people realize they can’t cover basic necessities and keep up with debt payments.
Financial insecurity heightens the risk of bankruptcy
One issue that’s plaguing many Americans is the larger economic shift. Inflation is causing prices to increase, but salaries aren’t keeping up with that increase. Many consumers are already drowning in debt and barely making ends meet. Some are simply drowning and need a way to get a fresh financial start so they don’t have to worry about ever-increasing debt.
Bankruptcy is one option that can help people reclaim their financial stability. Both of the most common forms of consumer bankruptcy, Chapter 7 and Chapter 11, enable the filer to have debts discharged once they meet the court’s requirements.
One of the requirements is taking part in credit counseling and a debtor education course that provides proven methods to remain financially stable once the bankruptcy is discharged. Having experienced legal guidance can help you maneuver the process successfully.