Are You a Legal Professional? Survey Finds Most Americans Fail to Set or Follow Budgets


EAGAN, Minn., Oct. 12 -- A record number of people are expected to file for personal bankruptcy this year, rushing to beat a change in the law that may make it more difficult and expensive for people to file for bankruptcy. The bankruptcy reform, which takes effect Oct. 17, requires credit counseling for those filing for bankruptcy, and sets income limits on those who will be allowed to file for Chapter 7 liquidation of debts.

More than 2 million Americans filed for bankruptcy in 2004, according to American Bankruptcy Institute data, and millions more are awash in debt. Total household debt in the U.S. has doubled in only the last five years according to Federal Reserve Bank figures.

A new survey by the legal Web site found that 61 percent of Americans either don't have a household budget or have difficulty sticking to their budget.

While seven out of 10 people surveyed said they have a household budget, nearly half of those who set a budget said they either had trouble sticking to that budget this year or completely gave up trying to follow it.

"Most people either fail to set a budget or aren't disciplined enough to stay within their budget, primarily because of the ease of using credit cards," said William Norton III, author of Norton Bankruptcy Law and Practice 2d, published by Thomson West.

"Having a budget and living within your means are essential to keeping your finances healthy," said Norton. "Many people have trouble sticking to their budgets because it's easy for them to use their credit cards when they should be exercising some restraint. If you do use a credit card, you should always pay off the balance in full each month, and never carry balances and accrue interest charges. If you buy something and can't pay for it that same month, then you probably shouldn't buy it."

Norton advises that people might find it easier to stick to their budgets if they simply stop using their credit cards altogether.

Information on the new bankruptcy law, tips on how to manage debt and help in finding a bankruptcy attorney can be found at Web sites such as

NOTE TO EDITORS: The survey questioned a demographically balanced sample of 1,000 American adults, and results are accurate to plus or minus 3 percent. The survey was conducted by Ipsos Public Affairs.

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