Why Property & Casualty and Life and Health Producers are turning to Legal Plans?


The effects of the biggest recession since the 1930s spread throughout the economy and every community. At least 25 court systems face budget shortfalls.1 The depth of states’ funding deficits is substantial: New Hampshire suspended jury trials for a month, Utah is considering furloughing 1,000 court employees for 26 days, and New York has instituted a hiring freeze.2 Funding for civil legal services has also taken a substantial cut: the IOLA Fund, a fiduciary fund administered through the N.Y. State Comptroller that funds civil legal services, has indicated that it is in an unprecedented crisis. One state cut financial aid to Civil Legal Aid by an additional $2.2 million.3 Nationally, the unemployment rate more than doubled, increasing to 10.2 percent, with the number of unemployed now at 15.7 million.4

Historically, a rise in unemployment correlates directly with increased credit card use because credit cards become a means for consumers, particularly middle- and lower-class consumers, to pay for basic living and medical expenses—a purpose for which credit cards were not intended.5

The amount of credit card debt in the United States is startling. At the end of 2008, Americans’ credit card debt reached $972.73 billion; the average credit card debt per American household was $8,329. Seventy-eight percent of American households had at least one credit card. In New York State, on average, individuals have 4.5 credit cards; 14.8 percent of New York residents are using half or more of their credit.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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