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Consumer Bankruptcy Filings Approach High Levels Seen Before 2005 Reform Law

July 23, 2009

As Riverside County consumer bankruptcy attorneys, we already knew that bankruptcies were on the rise, thanks to the economic downturn. But a July 20 article at CreditCards.com put those numbers in an interesting perspective. According to an analysis of nationwide consumer bankruptcy filings, people are filing for bankruptcy protection at rates so high that they are almost approaching the high rates from the months before the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act took effect. According to the article, per-capita bankruptcy rates have increased in almost every state, and doubled or even tripled in some states.

The data comes from Automated Access to Court Electronic Records, a bankruptcy data company. It said Americans filed 5,593 bankruptcy petitions per day in the first half of this year. That number approaches the 6,339 per day filed in 2004, just before the reform law took effect, and vastly outpaces the 2,372 filings per day filed after the law in 2006. Experts expect 1.4 million filings throughout 2009, which would be a 35% increase over 2008 and approach the 2 million filings in 2005. Those interviewed in the article blamed the economic downturn, which has meant more unemployment and foreclosures and higher costs for many necessities.

This situation is remarkable to Rosemead bankruptcy lawyers like us because the 2005 bankruptcy law made it substantially harder for consumers to file for individual bankruptcy. The law instituted a strict and complicated test of the filer's income, higher filing fees, mandatory counseling and other onerous requirements. Experts on both sides believed this would make bankruptcy harder to get and more expensive, almost requiring help from an attorney. As a result, conventional wisdom says that bankruptcies should stay low, even in bad times. Instead, they're rising to levels near the 2005 peak. As a bankruptcy law professor in the article said, we believe this shows the extent to which the economic downturn has devastated ordinary people's finances.

Bankruptcy law firm Howard Law represents people throughout California who are ready to explore legal options for dealing with their debts. Our Oceanside bankruptcy attorneys do a thorough review of each new client's finances to help them decide whether bankruptcy is truly their best option. If it is, we can counsel clients about which type of individual bankruptcy is best for their circumstances and follow through with advice about consequences for their taxes and other major financial obligations. If we believe bankruptcy would hurt more than help, we also offer Southern California debt settlement services and mortgage loan modification for troubled homeowners. We believe our job is to give clients the complete legal and financial picture -- not just file the paperwork.

If you're considering a bankruptcy because you don't believe you can ever pay back your debts, you should call Howard Law right away. We offer free, confidential consultations to all potential clients. To set one up, you can reach us toll-free at 1-800-872-5925 or contact us through the Internet.