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Levitt & Slafkes, P.C. - Essex County Bankruptcy Attorneys

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Levitt & Slafkes, P.C. - Essex County Bankruptcy Attorneys
GET THE FRESH START YOU DESERVE

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Bankruptcy & Debt Relief For
Individuals and Businesses

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More

Foreclosure Defense &
Mortgage Litigation

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More

Commercial and Bankruptcy
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Bankruptcy Court

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An Estimated 70 Million Americans Are Considered to Be ‘Wealthy Poor’

| Apr 23, 2014 | News Bankruptcy and Debt |

Many New Jersey residents who are now in their 30s and 40s grew up in families that were considered to be middle to upper class. As such, many likely enjoyed taking family vacations, owned one or more cars and were able to attend and pay for college without accruing massive amounts of debt. Today, however, many of these same individuals are facing a very different reality as they attempt to provide the same standard of living they enjoyed to their own children.

For many middle class families today, wage increases have not kept pace with increases in the cost of living. This fact, however, has not changed the expectations associated with being middle class. To meet these expectations, it is common for people in the middle class to take out larges mortgages to buy nice homes, borrow money to purchase motor vehicles and rely on credit cards to maintain their lifestyles. As a result, families that by all outward appearances seem well off are in fact living paycheck to paycheck.

In a recently released report entitled The Wealthy Hand-to-Mouth, university researchers shed light on the financial realities and challenges facing an estimated 70 million Americans who they collectively classify as the “wealthy poor” — those who earn average annual incomes of $50,000 to $100,000 and spend that amount and more each year.

The so-called “wealthy poor” often own homes and cars, send their children to college and have no trouble securing loans and credit cards. However, to maintain this lifestyle, every dollar earned each month is used to pay mortgages, car loans, education expenses and other bills associated with providing for their families.

Another characteristic of the “wealthy poor” is that they are ill-prepared for an economic crisis. Because the vast majority of their assets, such as real estate and personal property, cannot be easily or quickly converted to cash, they are especially vulnerable when faced with economic hardships, such as lost jobs or medical emergencies.

Americans who live paycheck to paycheck in order to afford a middle-class lifestyle can easily develop debt problems. For many of these hardworking individuals, Chapter 7 or Chapter 13 bankruptcy can provide relief from their debts and the opportunity to start fresh.

Source Articles:

Source: Yahoo Finance, “The ‘wealthy poor’ replace the middle class,” Rick Newman, March 21, 2014

Brooking Panel on Economic Activity, “The Wealthy Hand-to-Mouth,” March 21, 2014

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