Sunday, February 26, 2012

Pride, Shame Fuel Consumer Bankruptcies

For years economists and financial advisers have scratched their heads and wondered how so many Americans wound up in bankruptcy. Studies have shown that bankruptcy isn't all that hard to avoid, but it's the human condition, new data says, that is often the main driver.

Tim Tarvin, a legal professor at the University of Arkansas law school, says that the crux of the matter is this: It’s overwhelmingly individuals, not corporations, that fall into bankruptcy. Often, it’s the individual’s own fault, as Americans wait far too long to look into bankruptcy protection, primarily out of shame and wounded pride.

It’s all about shame, Tarvin says, noting that consumers who admit to being in bankruptcy and have a financial plan to deal with it are much more likely to get on their feet again than those who go “underground,” as he puts it.

Read the full article at The Morning Journal

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