LA Inflation: How Chapter 7 Bankruptcy Can Provide Relief
The US saw an 8.5% rise in the Consumer Price Index (CPI) between March 2021 and March 2022. It’s 8.5% more costly to pay for basic consumer expenses like food and energy in spring of 2022. Although the impact can vary from one place to another, Los Angeles is on track with the rest of America.
Los Angeles saw an 8.5% price increase during the same time period. The price rise is not uniform. Some items have seen a decrease in price of less than 8.5%. Other items, such as food, are in line with the overall increase. Others, however, exceed 8.5%. In Los Angeles, for example, energy prices have risen by 36.7%. We don’t need to tell you how difficult inflation can be if your income is the same as before inflation hit.
Can Chapter 7 Bankruptcy Help You Fight Inflation?
Although bankruptcy will not lower the price of consumer goods, it can help you weather the changes. You’re likely spending money each month on interest if you have high-cost debt such as credit card debt. Late fees are almost certain if you have fallen behind, or are late sporadically.
If you have $5,000 of credit card debt and are paying 18% interest at 3% minimum payments and $5,000 monthly, it will take approximately 19 years to repay that credit card. This assumes that you don’t make any purchases, or incur any late fees. Interest will take about half the amount you pay towards your credit card debt.
The cost of higher balances or higher interest rates is obvious. It will take 27 years for the same $5,000 debt to be paid at the same minimum payment, 3%, but the interest rate is 23.9%. 65% of your payments will go towards interest.
This article was written by Alla Tenina. Alla is a top estate planning attorney in Sherman Oaks, CA, and the founder of Tenina law. She has experience in bankruptcies, real estate planning, and complex tax matters. The information provided on this website does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only. Information on this website may not constitute the most up-to-date legal or other information. This website contains links to other third-party websites. Such links are only for the convenience of the reader, user or browser; the ABA and its members do not recommend or endorse the contents of the third-party sites.