How can Single, Separated or Divorced Women Avoid Bankruptcy?

Some 69,000 women filed for either Chapter 7 or Chapter 13 Bankruptcy in 1981. By 2001, according to research by Harvard law bankruptcy professor Elizabeth Warren, women filing Bankruptcy independently or as part of a couple numbered close to a million.

What can women do to avoid Bankrutpcy filings?

One's gender does little to predispose you to a Bankrutptcy filing any more than one's eye color.  But the statistical evidence shows that women are more likely to end up in certain financial predicaments that often lead to declaring Bankruptcy.

Contrary to the stereotype that those who file Bankruptcy have irresponsibly spent themselves into a hole, nine out of 10 women were forced into Bankruptcy by a job loss, medical emergency or divorce.

These same factors tend to be present in many male filed bankrupties. Women, however, often have less economic security-particularly if they have children- according to Professor Warren.  

Warren's data, based on Chapter 7 and 13 filings, make it scarily clear:

• And for single women with kids, the bankruptcy rate nearly triples to 21.3 cases per thousand.

Single women alone comprise almost 40% of all bankruptcy filings.

• Bankruptcy's warning signs

Women often have lower incomes, and after divorce, often bear more costs of child-care than men.  

• SINGLE MOTHERS.  While divorce is not easy for men or women,  women are more likely to be to care for children and aging parents.  These single mother still have most of the costs of the married couple, but they are forced to do it on one (usually lower) income.   

• LACK OF STEADY INCOME.   A lot of mothers with very young children, either do not work outside the home, work-part time, or help their husband out in their own business.  Therefore, the single mothers often are less employable or have diminshed earning capacity because of these facts.  Marian worked from home, helping out in her husband's business.

• NOT WORRING ABOUT MONEY MATTERS. With children in the home, and other demand on their time, mothers often push aside the financial management or allow their husband to do it.  

• TAKING ON TOO MUCH DEBT. Taking on more debt than you can reasonably handle is another major cause of bankruptcy.  Often times people with families spent money based upon their belief that the expenses are justified and needed by the family.  They will charge credit cards or take equity out of their home without having a reasonable plan to repay those debts. 

• FAILING TO ADJUST YOUR LIFESTYLE QUICKLY BASED UPON CHANGES IN INCOME.  Many people end up filing Bankruptcy because they fail to adjust their expenses, such as their home or cars, based upon their change of financial condition.  

Raising the child suppot payments will not greatly help.  The increased costs of raising children has far outpaced the increase in child support awards.  The reality is now two households must be supported on what used to support one household.  Therefore, financial ruin, and filing bankruptcy is almost of a product of a terminating marriage.  

Any good parent is at much greater risk of having to file Bankruptcy because the parents are pushing themselves to their financial limits to buy their children the best.  They want to buy houses in the best school districts, the newest games for the PS3, or Wii, and maybe even a car and insurance for their teenage children. 

• How to Avoid Filing Bankruptcy

Obviously, there are some times when filing Bankruptcy may be a woman's best or only solution. But despite being financially at risk, if most of your debts are secured, like your home or car, if you want to keep them, will not be discharged or wiped out in Bankruptcy.  Women with unsecured debt, like credit card debt, can eliminate their credit card debt and have their financial slate wiped clean.

But a new Bankruptcy law that took effect in late 2005 makes filing Bankruptcy more complex.  If you feel that filing Bankruptcy might be your best choice, you should consult a full-time Bankruptcy lawyer who can help you decide if it's worth the consequences.  You can generally get a free bankruptcy consultation from most Bankruptcy lawyers.

Meanwhile, if you feel you're at risk declaring Bankruptcy based on these five financial risk factors, and especially if you're a married woman on the brink of divorce, act now to protect yourself:

• Get savvy. If you're not on top of your finances, now is the time to take a crash course on personal financial management.

• Divide your debts. Cancel all joint credit cards and other debts.

• Claim your assets. Make sure your name is on the title to the house and on all investment accounts.

• Scale back your lifestyle now. If you're getting divorced, you need to live on 50% of what you're used to live on..

• Know your rights. In the event of divorce, the IRS allows you to file an "innocent spouse" claim, if you feel you don't owe certain taxes.  An expert in Tax Law like Phillip Gillet, a Bakersfield Tax Attorney, can provide you with a consultation to tell you about all the different solutations to your tax problems. 

• Get financial and Bankruptcy counseling . Depending on your circumstances, you may not need Bankruptcy if you can learn to live within your means.  While it may seem wierd a Bankruptcy Lawyer is an excellent person to tell you what declaring Bankruptcy can and cannot do for you.  A Free No-Obligation Bankruptcy Consultation can provide your with the information necessary for determining whether declaring Bankruptcy is right for you.