Survey says many Americans lack sufficient savings for emergencies

April 03, 2013 (Press-News.org) Survey says many Americans lack sufficient savings for emergencies

Article provided by John Christopher Robinson
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According to a recent survey by Bankrate.com, many Americans do not have sufficient savings to cover a financial emergency such as a job loss or unexpected medical expenses. Although experts recommend that people save enough money to cover their regular expenses for at least three months, it appears this advice has fallen on deaf ears for many.

During the survey, Bankrate.com asked people whether they have more credit card debt or emergency savings. A whopping 45 percent of respondents said that they had more credit card debt than emergency savings. Although this figure is shocking, it is not a recent phenomenon. In a similar survey that was conducted in 2012, 46 percent said that they had more credit card debt; in 2011, it was 48 percent.

This trend was not just limited to the very poor. Among the highest level of income that was surveyed, households with an annual income of $75,000 or more, one-third had more credit card debt than savings.

The lack of savings should not be blamed on the recent recession, according to Bankrate. The survey noted that the percentage of disposable income saved by Americans has declined 20 years before the recession. The recession changed things slightly, by increasing the savings rate, but not enough to reverse the 20-year trend.

Bankruptcy may offer solution

For Americans who are drowning in credit card debt, bankruptcy may help by relieving the obligation to repay many types of debt. In particular, unsecured debt, such as medical bills, personal loans and credit card debt are often eliminated in bankruptcy.

In general, individuals can file either Chapter 7 or Chapter 13 bankruptcy. In Chapter 7, also called liquidation, the debtor's nonexempt assets are sold off to pay his or her debts. Although this sounds like something from a Dickens novel, in reality most people who file bankruptcy do not have any nonexempt assets, so the majority loses no property. After the sale (if there is one), the debtor receives a discharge relieving him or her of the obligation to repay many types of debt.

In Chapter 13 bankruptcy, there is not a sale. Instead, the debtor's debts are reorganized into a payment plan. The debtor makes monthly payments towards the debt, paying them off in full or partially over a three to five-year period. The amount of each monthly payment depends on his or her disposable income. As long as payments are made each month, the debtor can keep his or her property. Once the payment plan ends, a discharge is granted for most of the remaining debt.

A bankruptcy attorney can help

If you are considering bankruptcy, as the law is very complicated, it is wise to consult with an experienced bankruptcy attorney. An attorney can consider your personal situation and recommend the type of bankruptcy (or other debt relief option) that would be right for you.