As Norco individual bankruptcy lawyers, we were interested to see a new report on the bankruptcy filings reported for November. The Wall Street Journal reported Dec. 1 that new bankruptcies dropped 13 percent last month over October's filings, for a total of 114,587. However, that number was still 2.2 percent higher than the number for November of 2009, and experts say 2010 is still on track to set a record high for number of bankruptcy filings since the 2005 changes to the bankruptcy code. Experts suggested that the slowdown may be the delayed effect of increased caution by consumers, although no evidence was offered to support this.
The bankruptcy code saw significant changes five years ago, in an effort the Journal said was intended to make bankruptcy more difficult. As a result, filings spiked just before the new law took effect, then dropped immediately. They have been creeping up again lately, thanks in part to the same bad economy that is reducing consumer spending. The article also notes that unemployment may be a cause. It quoted the Institute for Financial Literacy, which found a 13 percent increase in bankruptcy filers reporting loss of income and a 6 percent increase in those reporting loss of a job. The article also mentioned a lack of availability of credit, which hurts some businesses by making it harder to refinance debt or move money around. In all, bankruptcies are expected to reach about 1.6 million this year.
We follow this news regularly in our work as Torrance personal bankruptcy attorneys, so we're not at all surprised by the volume of filings. But it's good to see that the rate of bankruptcies may be slowing, since that suggests less financial suffering. As a spokesperson for the American Bankruptcy Institute notes in the article, there is also a down side when consumers reduce their spending: less spending hurts the economy overall. However, it also hurts the economy when large numbers of people are forced to declare bankruptcy, since many of their creditors get little or no payment. It would be nice if this were an early sign of an economic recovery that unfreezes credit, increases new jobs and helps the real estate market rebound -- but it's still early.
If you're feeing overwhelmed by huge debt and constant phone calls from unpleasant creditors, you should talk to the experienced Foothill Ranch consumer bankruptcy lawyers at Howard Law PC. Many people feel that bankruptcy is a failure, or an irresponsible choice by people who don't want to meet their personal obligations. In fact, bankruptcy can be a very responsible choice, because it requires hard work, sacrifice and consistency to successfully discharge all of your debts and start over. In Chapter 7 bankruptcy, filers sell off much of their property, pay the debts they can and have the remainder forgiven. In Chapter 13, they make a payment plan and stick with it for three to five years, with some debt forgiven. At the end, their credit is compromised -- but they have no more debt and can start the process of rebuilding their financial lives.
Howard Law offers free, confidential case evaluations, so you can talk to us about your situation at no further risk or obligation. To learn more or set up a meeting, call us toll-free at 1-800-872-5925 or send us a message through the Internet.