AICCCA - Learn Warning Signs and
Seek Help Early to Avoid Bankruptcy
Fairfax, VA - June 14, 2007 - In 2006, personal bankruptcies decreased 70 percent from its high in 2005. However the rate is increasing, as reported by the American Bankruptcy Institute, with an increase of 51.3 percent in filings for May 2007 compared to May 2006. The Bankruptcy Abuse Prevention Consumer Protection Act requires consumers seek credit counseling before they can file for bankruptcy. Of the approximately 400,000 persons that AICCCA members have counseled since the law went into effect in October of 2005 more than 95 percent went on to file for bankruptcy.
"By the time our agencies see consumers for pre-bankruptcy counseling it is usually too late for any alternative solutions and the consumers have no choice but to file for bankruptcy," said David Jones, president, Association of Independent Consumer Credit Counseling Agencies. "If consumers recognized earlier the warning signs of serious financial problems, they would have more choices for a successful solution."
To help, AICCCA has developed the following warning signs:
Living paycheck to paycheck - A recent survey by American Payroll Association revealed that 65 percent of Americans report living paycheck to paycheck. Losing a job or a decrease in pay would put them in immediate financial difficulty and unable to pay some monthly bills. Unless a change can be made very quickly, their financial situations could become dire in a matter of months.
No savings cushion - The savings rate for Americans is negative. We spend more than we earn and that habit means that any major financial outlay due to divorce, a large unexpected expense or car or home repair could begin a financial meltdown.
More than twenty percent non-mortgage debt to income ratio - The Center for American Progress reports in its May Economic Snapshot that by December 2006 household debt rose to 132.4 percent of disposable income. For those spending more than 20 percent of net income to satisfy non-mortgage debt, a drastic change in spending behaviors is needed.
Making only minimum payments on credit cards - More than forty percent of people with credit cards carry a balance. Paying only the minimum amount due means staying in debt much longer than is prudent and could indicate future financial trouble should income decrease or be interrupted by job loss or illness.
Not adequately insured - Some studies suggest that 50 percent of bankruptcies involve medical debt. Without adequate insurance, the high cost of medical, home or car expenses can ruin personal finances.
AICCCA urges consumers who are experiencing two or more of the above warning signs to seek help now. Contact an AICCCA member agency by calling 1-866-703-TRUSTAICCCA (866-703-8787) or visit www.aiccca.org.
Founded in 1993, Association of Independent Consumer Credit Counseling Agencies (AICCCA) is a national membership organization, established to promote quality and consistent delivery of credit counseling services. AICCCA and its members are focused on improved creditor relations, efficient processes and advanced technology to best serve clients and creditors. AICCCA members are independent nonprofit agencies that advocate for debtors, counsel millions of consumers annually nationwide and provide debt management services to consumers with excessive unsecured debt. For more information or to contact an AICCCA member office call 866-703-TRUSTAICCCA (866-703-8787) or visit www.aiccca.org.
