The Role Debt Plays in Poverty

May 27, 2019

Debt Harassment Lawyer in Tampa, FL

The fact that millions of Americans struggle with debt is not a hidden fact. For decades there has been a great divide between economic classes in the United States. Some individuals’ struggles go beyond being in debt, and they are so financially poor that they face the reality of poverty.

Some individuals who are experiencing uncontrollable debt may obtain a fresh start by filing for bankruptcy. Others are so plagued by financial hardship that they struggle to make ends meet on a daily basis. Whether impoverished or suffering financially to a lesser degree, these suggestions will be beneficial.

Assets and Savings

Both assets and savings are powerful anti-poverty tools. Assets are important in promoting financial mobility and can fulfill needs as they arise according to life’s current demands. In addition, ownership of assets can have a positive impact for future generations. Savings also have the potential for large impact. Even small amounts of savings can encourage low-income families to plan for the future and look beyond their current situation. Savings also provides some insurance in case of an emergency, or a sudden decline in income.

The Roadblocks

Low-income families have the ability to save, but are more likely to do so if they have support and incentives to do so – both things wealthier individuals have been able to take advantage of in the past. Many low-income workers have very little, if any, retirement savings, thanks in part to the shift from traditional pensions to 401(k)s. There is very little support for short-term savings accounts that allow for flexible use. This means that in an emergency or unexpected decline in income, many risk large amounts of debt.

Programs employed today to combat poverty are essentially employing a temporary solution to a permanent problem. By placing most of the emphasis on income alone, we may be preventing people from falling deeper into poverty, but we are not doing anything to address the root of the problem by also focusing on building wealth. The real need is to bring families out of poverty over the long term and give them the ability to climb the social ladder.

Possible Solutions

It is important for future generations to recognize the problem and employ meaningful solutions to poverty. One suggestion is to revamp the tax code to provide incentives for families to maintain savings and resources. Another is to use a universal retirement savings system that provides low-income workers with both the opportunity and the means to save. Promoting savings and opportunity will provide a safety net for families and not force them to live on the brink of financial disaster.

In order to achieve the ultimate goal of upward financial mobility, programs used to fight poverty must include an approach on asset building. This includes not setting asset limits and drafting policies that encourage savings to help poor families.

If you or someone you know is struggling financially, a debt harassment lawyer in Tampa, FL may be able to help. Contact a law firm today to schedule a consultation to discuss the bankruptcy process.

Call Ziegler Diamond Law: Debt Fighters for their insight into bankruptcy and poverty.

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About the Author

Ziegler Diamond Law: Debt Fighters, provides effective legal services to consumers in Clearwater, Florida, and throughout the Tampa Bay area who are facing home foreclosure, unmanageable debts, debt collector harassment, or other debt-related problems.