As our country works through this recession, some areas have been hit much harder than others; Indiana and Michigan are no exception.
Both rank among the states with the highest number of bankruptcies in the country.
With so many jobs lost, many people are now struggling to pay for necessities, and it is forcing many to ask: is bankruptcy the answer?
Experts say bankruptcy is something that can happen to anyone, not just the irresponsible person who rang up too much credit card debt.
Bankruptcy attorneys tell us peoples' situations can change in an instant. They might lose a job, lose insurance, and then fall behind on the mortgage and car payments. Then the credit card debt racks up and suddenly it spirals out of control.
In a city, located in a county that is in one of the worst economic shapes in the nation, calls for Elkhart-based bankruptcy attorney Tamara Renner keep coming in. Renner often works nights and weekends, to help clients decide if bankruptcy is the answer.
“Everyday I see absolutely ordinary people who have worked all of their lives, always paid their bills, they come in here and absolutely meltdown and collapse,” says Renner.
From factory workers to executives making six-figures, thousands are out of a job.
“It isn't just the irresponsible, uneducated individual that just doesn't know how to handle their money, that's really not who I see,” adds Renner.
Among Renner's clients, laid off RV workers.
“It's very emotional because you never think you're going to have to file bankruptcy. I never in my wildest dreams would have thought,” says a woman NewsCenter 16 will call Amy. She asked that her identity not be revealed.
Months after losing her well-paid job in Elkhart County, Amy is filing for Chapter 7 bankruptcy. The 20-something lost her car, is losing her house, and living with friends.
“I've been working since I was 16 years old, always working to go further in my life. I had a budget plan, everything was set, everything was paid on time, bills always came before luxury, kind of went downhill then,” says Amy.
Things went downhill when she lost her job. Amy says she also made the mistake of co-signing for a friend to make a major purchase. When the friend didn't pay, Amy was stuck with the bill. She also wishes she would have saved more.
“It's a big lesson learned, try to save more money and not just get into a secure state, because anymore of today's society, you don't know whether your job is going to go under or they're going to come out of the blue and say we're closing this company down or moving it out of state,” says Amy.
Another big mistake folks in debt make?
“Draining your retirement fund is one of the most critical mistakes I see people make,” explains Renner. She says retirements, pensions, and 401ks are protected in most bankruptcies.
And while this bankruptcy attorney has a partner in practice, her other partner is Tippy, a service and therapy dog. Tippy is trained to help calm the stressed.
“Her job is to make people feel people feel better and she does that pretty readily,” adds Renner.
Finally, if you're feeling like you're drowning in debt, Renner says don't be afraid to seek help sooner, rather than later.
“Do it early, knowledge is power, knowledge in advance of the bad decisions is going to save you,” says Renner.
As for Amy, she's going back to school, thanks to some help from funding through the unemployment office.
“I look at it as it's going to give me a fresh start; it's going to give me a new beginning. It's not something I'm proud of, it's not something that I wanted to do,” explains Amy.
Renner, along with other experts we talked to, think more education about finances and debt needs to happen in our schools.
And just because you consult with a bankruptcy attorney, doesn't mean you have to file. They might have other options to help you get out of debt, without having to go down that road.
Coming up Thursday night on NewsCenter 16 at 5 and 6, Sarah Platt will continue her series, “Is Bankruptcy the Answer?”
We'll hear from a man who filed a Chapter 7 bankruptcy about a year and a half ago. We'll show you how he's moving on and have information on where you can get help if you are struggling with debt.
We'll also have a "buyer beware" warning about debt consolidation businesses that offer help to people in debt, but can end up doing more damage instead.
Click here for a list of bankruptcy resources.
Click here to read Part 1 of this series.