Submitted by Jen Jones on Mon, 01/18/2010 - 8:48pm
In 2005, Congressional changes to the Bankruptcy Code made bankruptcy filing more cumbersome by requiring quite a bit more red tape, leading to a significant drop in filings the following year (2006). But, as a result of the economic downturn, during the past three years, bankruptcy filings have risen back to the levels seen before Congress’ 2005 bankruptcy overhaul.
In fact, despite notions that the economy improved last year, 2009 appears to have been a devastating year for the finances of American people—and businesses—beleaguered by an unending stream of bad economic news.
According to an Associated Press report on January 4, 2010, U.S. consumers and businesses are filing for bankruptcy at a pace that made 2009 a year with the seventh most filings on record, garnering more than 1.4 million bankruptcy petitions. This record number represented a staggering increase of 32 percent from 2008.
These statistics, gathered by the National Bankruptcy Research Center (NBRC), measure consumer and business filings from December through November. December 2009 filings are not included in the total. Of the 1.43 million bankruptcies in 2009, 116,000 were recorded in December 2009, up 22 percent from the same month the year prior—a sign that bankruptcies aren’t exactly slowing down.
Another sign of a continuing wave of insolvency is that recent, recession-driven bankruptcies have occurred in mini waves of their own, beginning nearly two years ago with a run of adjustable-rate mortgage (ARM)-related filings; followed closely with an upsurge of filings from the newly unemployed; and finally, and more recently, with findings that wealthy individuals and business owners are now succumbing to the economic effect of lower incomes and shrinking home values.
The increase includes a significant upturn in 2009 Chapter 7 (liquidation) filings, which increased by more than 42 percent compared to this time last year. Conversely, Chapter 13 filings have increased at only 12 percent. The steady decline in Chapter 13 filings, stands in direct contrast with the strong push by Congress in its 2005 bankruptcy legislation to encourage bankrupt consumers to choose Chapter 13—with its focus on creditor repayment—rather than Chapter 7. The figures seem to yield not only a failure in the policies and goals of the Congressional overhaul, but consumers desire to wipe their financial slate clean, and quickly, in lieu of holding on to, for example, their home, or other non-exempt possessions.
In fact, states with high foreclosure rates are leading the way in bankruptcies as well; again, signaling the housing crisis, adjustable mortgages, and a loss of home equity, as primary factors in many Americans’ decision to file. According to the NBRC, nationwide, filings to date amount to almost 11,500 filings per million households with the highest filing rates in Nevada (two-and-half times the national average), followed by Tennessee, Georgia, Alabama, and Indiana (with one and a half times the national average).
Is the housing market, job market, or a combination of factors hitting you and your household hard? If so, the numbers above show you’re not alone. In fact, there’s strength in these numbers—knowing a qualified bankruptcy attorney has helped many weed through the bankruptcy laws and the bankruptcy system, yielding the possibility of a new start— at a low cost— for a financially viable and secure future.
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 +1-919-646-2654, 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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