Submitted by Jen Jones on Thu, 06/17/2010 - 10:17am
Just when you thought it was safe to call it an economic recovery, the American Bankruptcy Institute (ABI) pointed to a continuing recession with reports last week that personal bankruptcy filings for the month of May 2010 have increased compared with a year ago (May 2009). In this data also reveals figures finding that total bankruptcies dropped slightly in May 2010 versus the previous month of April 2010.
According to the ABI findings, in May 2010, 136,142 personal bankruptcy cases were filed, a nine percent increase from May 2009, when 124,838 cases were filed. May’s total marked a six percent drop from April of this year, when 144,490 cases were filed. Of the cases filed, 26 percent were under Chapter 13 of the U.S. Bankruptcy Code, and most of the remaining 74 percent were under Chapter 7. Based on figures collected so far in 2010, most sources estimate that personal bankruptcy filings this year will total about 1.6 million, a 10 percent increase over the 1.44 million filed in 2009.
While May marked a decline in filings from the previous month, the ABI data is still illustrative of a severe economic crisis—especially the recent year-to-year increase in insolvency.
While the reasons for the rise in personal bankruptcy, and specifically Chapter 7 bankruptcy, aren’t always clear, other economic forecasts in recent months shed some light on the ongoing issues.
First and foremost, an increase in total bankruptcy filings from this time last year could be one of the offshoots of consistent borderline double-digit national unemployment. This persistent joblessness means many average Americans who have been out of work for several months to a year or more are now exhausting their savings and turning to bankruptcy to get a better economic foothold. In addition to pushing people into bankruptcy, unemployment seems to responsible for the fact that Chapter 7 cases outnumber Chapter 13 cases nearly two to one. This data reveals that widespread unemployment may mean many people have too little money coming in to even consider a Chapter 13 bankruptcy repayment plan. As a result, Chapter 7 may be their only hope in an uncertain economic environment.
And there appears to be no help on the home front for those in over their heads and underwater in their mortgages. In addition to long-term unemployment affecting bankruptcy filings, mortgage costs may be pushing more filers toward Chapter 7. As has been well reported, despite efforts from the Obama Administration’s Home Affordable Modification Program (HAMP), millions of Americans with astronomical mortgages and facing foreclosure have not been able to have their loans modified and still owe more than their homes are worth. Stuck with expensive home loans that they can’t afford, many are willing to walk away from the underwater lifestyle using Chapter 7 (versus salvaging their homes through Chapter 13).
So, if you’re one of the millions struggling with unwieldy debt, long-term unemployment, or an unmanageable mortgage, bankruptcy can work for you as it has for so many this year, and last.
Knowing a qualified bankruptcy attorney can also help you to save money, time, and make you more self-sufficient in an uncertain future, yielding the right kinds of support, information and insights—at a low cost— for a viable and secure future beyond our own “Great Recession.” The bankruptcy experts at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to +1-833-627-0115, or during the off hours, you can make your own appointment right online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.
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