New Harvard study highlights the financial burden of high rents

On December 9, Harvard University's Joint Center for Housing Studies released a new report that has troubling implications for Americans who are struggling to make ends meet. If you are a renter and considering bankruptcy as a solution to your financial troubles, you probably don't have to be told that your landlord is charging you too much. But, you might not be aware of the massive scope of the high-rent problem.

More than half of renting households devote 30 percent or more of income to rent

Renters who must devote more than 30 percent of their income to rent are defined in government documentation as "cost-burdened." According to the new Harvard study, in 2012, more than half of all renters in America - accounting for approximately 21.1 million households - qualified as cost-burdened. With 50.8 percent of renting households cost-burdened last year, 2012 had the highest proportion of cost-burdened renters ever recorded in American history. Half a century ago, less than a quarter of renting households spent more than 30 percent of their income on rent.

Many renters must expend an ever greater share of their income on rent: the study found that 28 percent of renters are "severely cost-burdened," siphoning more than half of their income to rent.

While rents have been steadily increasing, household incomes have plummeted over the past 12 years. Adjusted for inflation, the Harvard researchers found that from 2000 to 2012, rents increased by six percent while the median renter income dropped by 13 percent.

Authors of the study pointed out that the recession drove many homeowners into foreclosure or otherwise pushed more homeowners into the rental market. The early 2000s saw only about 500,000 households added to the rental market every year, but the last three years have seen around 1.25 million more households entering the rental market annually. This has led to a lower inventory of affordable rental units, and thus enables landlords to ask for more from renters even as incomes are on the decline.

Struggling with rent? Discharging your debts through bankruptcy could free up money

Homeowners often get a lot of attention in the bankruptcy context, perhaps because many bankruptcies do involve some aspect of the foreclosure process. Nonetheless, high rents can put just as much stress on a household's finances as high mortgage payments, and renters who are struggling with a high debt load can benefit just as much from a bankruptcy filing as homeowners.

If you are among the millions of Americans who are stretched thin by high rents and burdensome debt loads, you should explore whether bankruptcy might be right for you. Bankruptcy can discharge most types of debt, and with your repayment obligations eradicated, more of your household income could be devoted to rent, food and other costly necessities. Get in touch with a bankruptcy lawyer today to learn more about the benefits of bankruptcy.