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Consumer Bankruptcies Slow in April But Remain High in Western States

May 18, 2010

As Upland bankruptcy lawyers, we were interested to see a pair of recent postings on the Wall Street Journal's Real Time Economics blog. The first of the posts said consumer bankruptcies were actually lower in April than they had been in March, suggesting a slowdown in the record pace of bankruptcies in 2009 and 2010. Perhaps even more interesting was the second post, however, which pointed out especially high rates of bankruptcy in Western states including California, Arizona and Nevada. Not surprisingly, the post pointed out that many of these states are the same states that have taken particularly hard hits in the housing downturn.

The bankruptcy rate information comes from the American Bankruptcy Institute, which said there wee 144,490 personal bankruptcy filings in April. That's down 3% from the number of filings in March of 2010 -- but it's still up 15% from April of 2009. That year set new records for its amount of bankruptcy filings, which were the highest since the bankruptcy reform law passed in 2005, and an ABI spokesman predicted similar or higher numbers in 2010. Thus far, bankruptcies in the first four months of 2010 are 17% higher than the same period in 2009. The states with the highest rates of bankruptcy filings were California, Arizona and Wyoming; the second-highest tier included Nevada, Florida, Maryland and Massachusetts. Surprisingly, the Journal reported that Tennessee, Alabama and South Carolina actually saw drops from April 2009's bankruptcy filings.

Our Fountain Valley bankruptcy attorneys are disappointed by this information, but not necessarily surprised. The correlation between states with troubled housing markets and states with high bankruptcy filings is not exact, but it's close enough to suggest that bankruptcies and mortgages are connected. In our work, we are sorry to say that we sometimes see clients whose mortgage problems led to other financial problems, as they overextended themselves to keep making unreasonably sized mortgage payments. More and more these days, we're also finding the opposite to be true: financial problems such as a layoff or loss of business are leading more and more people to trouble making mortgage payments.

At Howard Law PC, we see a lot of clients who did everything they could to avoid coming to us. Most people understandably want to avoid declaring bankruptcy, not only because of the effects on their financial lives, but also because they feel ashamed. As Mission Viejo bankruptcy attorneys, we urge our clients not to let shame, guilt or fear stop them from acknowledging that they need help. Bankruptcy isn't fun, but for some people, it's the first step toward getting their finances back together. With all potential clients, we start by analyzing whether a bankruptcy is appropriate, and can recommend other options if it's not. For those who do file for bankruptcy, we promise to stand by their sides throughout the complicated and sometimes lengthy process.

Howard Law offers free, confidential case evaluations, so there's no risk in speaking to us about your financial and legal options. To learn more or set up a meeting, call us toll-free at 1-800-872-5925 or contact us through the Internet.