Bankruptcies in Arizona dropped for the sixth straight year in 2016. However, according to a news report in The Arizona Republic, rising debt levels and delinquencies on some loans, including credit cards, are causing concern among many. These are signs, experts say, that the decline in the number of bankruptcies statewide might not be a trend that is sustainable. According to tabulations by the U.S. Bankruptcy Court in Phoenix, the number of consumers and small businesses statewide filing for bankruptcy dropped to 14,657 in 2016 compared to 16, 313 in 2015.
What the Numbers Mean
The 2016 figures are, of course, well below the 41,579 filings reported in 2010. So, 2016 marks the sixth straight year of improvement for Arizona as far as bankruptcy filings are concerned. This improvement has been attributed to dropping unemployment rates with more than 2 million net new jobs created nationally in 2016. Arizona’s unemployment rate is 5 percent, just slightly above the national rate of 4.7 percent.
While this is all good news, it is also a fact that Americans have been adding on to their debt levels in recent years. Delinquencies increased to 1.4 percent of consumer loan categories for the third quarter of 2016. The proportion of past-due credit cards also increased to 2.7 percent of all accounts, also up from the second quarter by 0.26 percent. The American Bankers Association considered loans 30 days or more overdue to be delinquent.
While consumer sentiment has surged at least in recent months, there are a few causes for concern. One of the worrisome signs is that about 48 percent of more than 2,000 adults surveyed by the National Endowment for Financial Education said they were living paycheck to paycheck. Also in December, a Tempe-based debt-negotiation services company warned of increasing debt levels and rising delinquencies on auto loans given to subprime borrowers.
Steps You Can Take to Improve Your Finances
The best actions are proactive. None of us wants to be in debt or have to file for bankruptcy protection. For many, bankruptcy is a last-ditch option. Remember, filing bankruptcy does not always mean an individual was irresponsible with his or her money and is seeking a bailout. There are steps you can take to prevent yourself from digging a hole in the first place and avoid a bankruptcy and get back in the black.
- Try to negotiate or settle your debts. You may also be able to negotiate a deal with your creditors to pay off your debt by paying cents on the dollar. Some lenders are willing to work with you on a reduced payment plan schedule or waive some of your current payments. However, often, people find that debt consolidation is not the solution. If this is you, contact an experienced Arizona bankruptcy lawyer who can help you evaluate your options.
- See if you can sell some of your property to pay off your debt. If you have a boat or a motorcycle you only use for special road trips, the decision is simple. If you are in debt, take a look at what you can do without. Consult with an appraiser so you can accurately determine the value of the property you wish to sell. Doing this can help you pay at least a portion of your debt without being forced to surrender your assets in a bankruptcy filing.
- Another route to take might be to borrow money from family or friends. Even though it might dent your ego, it might be what you need to avoid going deep into debt. See if they might be able to give you an interest-free loan and extra time to pay it off. But, be diligent in paying them back as soon as you possibly can. Many family relationships have been damaged by money matters.
- If you don’t already have a monthly budget, now would be the time to create one. Sit down with your spouse and children and clearly spell out your priorities. All of you may need to make real sacrifices and get rid of unnecessary expenses. You may have to eat more home-cooked meals and not see the inside of a restaurant for a while. Live within your meals and trim your spending. Your savings will add up if you develop a laser sharp focus. It may be all you need to avert a bankruptcy.
- Refinance your home loan. You may be able to save a few hundred dollars a month by restructuring your mortgage. The money you save by changing up your mortgage payments can be quite useful in paying off your remaining debt.
A good strategy to adopt when paying off your debts is to go from the smaller ones to the bigger balances. However, we meet with hundreds of Arizonans every year who are unable to handle their debts. They are overwhelmed by it and don’t know where to turn. If you are in this place, the experienced bankruptcy lawyers at the Pew Law Center can help you file for bankruptcy protection and assist with giving you that much-needed fresh start.
Our law firm helps individuals get the protection and debt relief they need under federal bankruptcy laws. We understand what’s at stake for you – your assets, your business and your financial future. We can help resolve your debt problems and help you determine the right course of action for your specific situation. Many people make the mistake of trying to resolve these issues on their own. You need a qualified, competent and dedicated bankruptcy lawyer on your side to explain complex laws and devise solid strategies to get you out of debt and on the road to a bright financial future. Call the Pew Law Center at (480) 745-1770 to schedule a no-cost, no-obligation financial strategy session.