The real estate bubble that caused the financial panic may be distant in the rearview mirror, but a recent study by the CFED (founded as the Corporation for Economic Development) has declared that the economic recovery has “bypassed” millions of Americans. Among its most disturbing findings are widespread poverty in American households and frequent use of bad credit mechanisms like payday loans. All of these problems can lead to New York bankruptcy.
Here are some highlights from the CFED’s “Assets & Opportunities Scorecard”:
- Incomes are flat, with one in four Americans holding a low-wage job. It’s unclear how that’s defined, but that figure has risen by several percentage points in recent decades, implying that it’s more likely that people are taking minimum wage jobs just to stay afloat rather than teenagers making money during summer months. Unemployment is down but underemployment is still higher than before the Great Recession.
- Americans’ capacity to absorb financial shocks is low. The study defines households as “liquid asset poor” when they have less than three months’ worth of savings in cash, and as many as 44 percent of U.S. households meet this definition. Although, there’s an upper limit to how much cash a household needs for emergencies.
- The CFED is on firmer ground when it discusses Americans’ creditworthiness. It found that one in five American households uses “fringe” financial services, which include payday loans. 55.6 percent of Americans have subprime credit scores, meaning a score below 640 on a scale of 300 to 850. Many of these people are “unbanked,” so they don’t have a bank account either.
- Within three years of leaving school, 14 percent of student debtors go into default.
- Unsurprisingly, these problems affect minorities more than white Americans.
The CFED focused on the role that states’ policies play in shaping poverty in the U.S., but it also conceded that some states still have bad outcomes, like high living costs and income inequality. In fact it listed New York, New Jersey, and Connecticut as examples of states that do things right while still having serious problems.
The CFED’s report can be found here (pdf).
Ultimately, the CFED is verifying something many already suspect: Tough times are here to stay for Americans. If what the report says describes your situation, and you are struggling to pay off debts, then talking to an experienced New York bankruptcy lawyer can help you put your financial problems in order.
For answers to more questions about bankruptcy, the automatic stay, effective strategies for dealing with foreclosure, and protecting your assets in bankruptcy please feel free to contact experienced Brooklyn bankruptcy attorney Bruce Weiner for a free initial consultation.
