Many of us have had the feeling that bankruptcies seemed to be on the increase, well here's some hard facts to back up that idea. U.S. consumers and businesses are filing for bankruptcy at a pace that made 2009 the seventh-worst year on record, with more than 1.4 million petitions submitted nationally. This is an increase of 32% compared to 2008.
While experts believe some of the increase is due to a natural recovery as consumers and attorneys become accustomed to a recent overhaul of bankruptcy laws, the numbers indicate clear correlations to recession-weary regions. Arizona saw the fastest increase, a jump of 77 percent from the year before, followed by Wyoming (60 percent), Nevada (59 percent) and California (58 percent).
It's a tragedy when individuals need to file for bankruptcy and unfortunately as businesses close due to bankruptcy, the number of the unemployed rises, potentially leading to more bankruptcies for families and individuals.
For three years, filings have been steadily rising back toward levels reached early in the decade before Congress overhauled the nation's bankruptcy laws. The 2005 alterations made bankruptcy filings more cumbersome, a move that followed fears from lenders that some consumers were abusing the system to wipe away debts.
Bankruptcies surged to slightly more than 2 million in 2005 as consumers rushed to file before the new law took effect but then plummeted to 600,000 in 2006. They've been climbing ever since and in 2009 became the seventh-highest year on record, behind only the years 1998 and 2001-2005. The 2005 spike had been preceded by a steady climb from 1.5 million in 2001 to 1.6 million in 2005.
It's naïve to think that changing bankruptcy laws will make the problem go away. When families or businesses are facing financial distress, changing litigation only tends to delay the inevitable. This is why it's vital that you find an experienced attorney who can help you navigate through changes in litigation and ensures that any actions taken are in your best interests.
Many people don't realize that there are two types of bankruptcy filings. Chapter 7 filings involve having the bankruptcy trustee gather and sell the debtor's nonexempt assets in order to cover debts owed to creditors. A Chapter 13 filing is where debtors who earn a regular income can develop a plan to repay all or part of their debts.
I offer a free initial consultation where you can go over your options with an experienced attorney in confidence. A vital part of this process is being able to get all your questions answered and helping you figure out your best plan to move forward.