16 Sep Factors Leading To Bankruptcy: High Costs Of Housing
The reason people file for bankruptcy is that they have debts that they can’t repay. To determine whether bankruptcy is a good option, you first have to examine the household budget. In order to make ends meet, people need to balance their household budgets. If they can’t cover all their needs, without using credit, the budget is not balanced.
Obviously, to balance a budget, people must must spend less than they make, but with amount that families are spending on housing on the rise, this major expenditure is causing budgets across America to go in the red each month. The percentage of gross income that the average household is spending for housing rose in 2005, according to the Census Bureau and reported in the The New York Times.
By JOHN LELAND
Published: September 12, 2007
Nationally, half of all renters and more than one third of all mortgage holders spent at least 30 percent of their gross income on housing costs.
This amount is disturbing because the figure is GROSS income. In “real” figures this figure is likely closer to 40% of take home pay for these families.
With most families operating two cars, needing daycare so both parents can work, and paying close to $3.00 per gallon of gasoline, there is often little little left for food and utilities, let alone savings, charity, clothing and activities that normal families participate in. As housing costs increase, more households use credit cards to cover those expenses. Eventually, the debt payments become too high to manage, or borrowers fall behind due to illness, job loss or divorce. This is when many people go to lawyers to see if bankruptcy can help them, and for many it can.
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