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THE TYPES OF FINANCIAL INSTABILITY FOUND IN A RECENT HARVARD BUSINESS REVIEW REPORT OFTEN LEADS TO THE NECESSITY FOR A BANKRUPTCY FILING
A recent report in the Harvard Business Review found instability in household income. Spikes and dips in income were tracked and there was more than five months of the year that had a spike or a dip. A spike or dip in income was defined as any month that income was either 25% more or less than the average household income. It comes as no surprise to a consumer bankruptcy attorney that income volatility often leads to a financial crisis necessitating a bankruptcy filing. A dip in income could lead to mortgage or vehicle payments becoming delinquent, or an increase in the use of credit cards to pay for medical or dental treatment, utilities, groceries and transportation costs. Quite often I see clients who have increasingly turned to revolving credit to survive during lean financial times.
The Harvard report likewise found significant volatility in monthly spending. Some of the monthly spending fluctuations could be blamed on emergencies, such as sickness, car repairs, housing repairs and educational costs. Unfortunately, when income and spending fluctuations hit vulnerable households it is very often necessary for families to seek the fresh start that can be gained from a bankruptcy filing.