High Housing Prices and Bankruptcy

How High Housing Prices Can Affect Bankruptcy

The dream of owning a home is becoming harder for many young people to achieve, with high housing prices and rising interest rates pushing homeownership further out of reach. And we’ve seen at our firm how, too often, high housing prices and bankruptcy go hand in hand.

If you’re dealing with financial stress, you may feel stuck renting or living paycheck to paycheck while debt piles up. As a bankruptcy lawyer, I’ve seen how these struggles with housing costs can impact finances and lead to serious legal problems.

Here’s how high housing prices are affecting people and what it means for your financial stability.

How Housing Costs Lead to Broader Financial Stress

Housing is one of the biggest expenses most people face. When housing costs are high, it leaves less room in your budget for everything else—like student loans, credit card payments, or building up savings.

For many people, trying to balance these costs becomes overwhelming, and that financial stress can eventually lead to bigger debt problems and even bankruptcy.

Trapped and Avoiding Foreclosure

Typically, if you face foreclosure and want to avoid it, you have a few options.

One is to sell and downsize. But as housing costs and interest rates rise, it can be harder and harder to find a new place to live at a price you can afford.

As a result, a lot of people come to our firm for help to stop foreclosure, in part because they have no other option.

Rising Rent Costs

If you’re renting because buying a home isn’t affordable, you’re not alone.

High housing prices push people into the rental market, driving up rental costs in cities across the country. And many people feel stuck paying even more than what a mortgage might cost, just because they lack the money for a down payment.

When a large portion of your income goes toward rent, it’s harder to pay down debt, save for emergencies, or even think about a down payment on a house. And it’s easier to get in real financial trouble.

Lack of Financial Security for Renters

In addition, homeownership itself allows a person to build wealth.

Renting doesn’t offer the same long-term benefits of building equity. As a result, many people who rent are more vulnerable to financial shocks and the whims of landlords. If the economy takes a turn, often renters feel crushed with no way out.

Credit Card Debt and Living Costs

When housing takes up most of your income, it’s tempting to rely on credit cards to cover other expenses. After all, your mortgage or rent are one thing you can’t put on a credit card.

Instead, you might choose to put groceries, medical bills, or even transportation costs on a credit card to get by. Over time, this can snowball into overwhelming debt that’s hard to manage.

How Bankruptcy Can Help

If you’re struggling with debt because of high housing costs and other financial pressures, bankruptcy might be a solution to consider. Here’s how it can help:

First, for homeowners, Chapter 13 bankruptcy allows you to create a repayment plan to pay off your debts over time. This can help you keep your assets and regain some control over your finances.

Importantly, Chapter 13 stops foreclosure in its tracks, so you can stay in your home and pay down the debt according to your ability.

Chapter 7 bankruptcy eliminates unsecured debts like credit cards and medical bills. For renters, this gives you a fresh start and can free up money in your budget to save for a future down payment.

Both bankruptcy chapters trigger something called an “automatic stay,” which stops creditors from harassing you with calls, wage garnishments, or lawsuits. This gives you breathing room to figure out your next steps.

If you’re curious about which chapter of bankruptcy might be right for you, our award-winning Memphis bankruptcy team can help.

Taking Control of Your Financial Future

If high housing prices and debt are making it impossible to move forward, bankruptcy offers a reset and fresh start.

As a Memphis bankruptcy lawyer, I can help you create a plan that works for you and your goals.

Don’t let skyrocketing housing costs hold you back any longer. Contact me today online or call us at 901-327-2100 for a free appointment to discuss your options, no strings attached.