New Bankruptcy Law Increases Importance of Keeping a Budget12 October 2005
A record number of people are
expected to file for personal bankruptcy this year, rushing to beat a change
in the law that may make it more difficult and expensive for people to file
for bankruptcy. The bankruptcy reform, which takes effect Oct. 17, requires
credit counseling for those filing for bankruptcy, and sets income limits on
those who will be allowed to file for Chapter 7 liquidation of debts.
More than 2 million Americans filed for bankruptcy in 2004, according to
American Bankruptcy Institute data, and millions more are awash in debt.
Total household debt in the U.S. has doubled in only the last five years
according to Federal Reserve Bank figures.
A new survey by the legal Web site FindLaw.com found that 61 percent of
Americans either don't have a household budget or have difficulty sticking to
their budget.
While seven out of 10 people surveyed said they have a household budget,
nearly half of those who set a budget said they either had trouble sticking to
that budget this year or completely gave up trying to follow it.
"Most people either fail to set a budget or aren't disciplined enough to
stay within their budget, primarily because of the ease of using credit
cards," said William Norton III, author of Norton Bankruptcy Law and Practice
2d, published by Thomson West.
"Having a budget and living within your means are essential to keeping
your finances healthy," said Norton. "Many people have trouble sticking to
their budgets because it's easy for them to use their credit cards when they
should be exercising some restraint. If you do use a credit card, you should
always pay off the balance in full each month, and never carry balances and
accrue interest charges. If you buy something and can't pay for it that same
month, then you probably shouldn't buy it."
Norton advises that people might find it easier to stick to their budgets
if they simply stop using their credit cards altogether.
Information on the new bankruptcy law, tips on how to manage debt and help
in finding a bankruptcy attorney can be found at Web sites such as
FindLaw.com.
NOTE TO EDITORS: The survey questioned a demographically balanced sample
of 1,000 American adults, and results are accurate to plus or minus 3 percent.
The survey was conducted by Ipsos Public Affairs.
Source: PR Newswire
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