So far this year in Arizona, more than 12,000 people and businesses have filed for bankruptcy..
She is seeing a type of client that she hasn’t seen since the 1980s — the so-called “financially healthy” client.
“They can’t afford the consequences of all the real estate investments because the tax issues related to that, bankruptcy becomes their only way out,” said Drain.
Drain said many people are committing a cardinal sin by using their 401K’s to get by.
“Those are monies that are protected, so my stomach hurts when I see people take their retirement accounts and put it into a black hole called the credit card,” she said.
It sounds like she is saying that those people should have filed for bankruptcy sooner, before they used any of their 401K money, because they could have kept all their 401K money through the bankruptcy.
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John Wake 06.09.09 at 1:42 pm
I just read that you cannot discharge student loan debt in bankruptcy!
One semester I needed a loan to go to the Spanish Immersion Program at NAU but in grad school in Florida I got by on my assistantship money alone while renting a room in a home with no cooling or heat for $70 a month and making the monthly payments on the NAU student loan. Gawd I was
cheapfrugal!Peter Fork 06.10.09 at 9:53 am
It seems like real estate still plays a second role in bankruptcy fillings:
“Almost two-thirds of bankruptcies involve medical problems,” said researcher David Himmelstein. “That’s up 50 percent from just six years ago.” Himmelstein said, “Three-quarters of the people who are medically bankrupt had insurance, mostly private insurance. But, it didn’t protect them once they got sick. It’s like an umbrella that melts in the rain.”