As Upland consumer bankruptcy attorneys, we follow bankruptcy filing news. So we weren't surprised to see an Aug. 18 item on MSN Money confirming what other news sources have already reported: Bankruptcies have reached their highest point in five years. The new data comes from the Administrative Office of the U.S. Courts, which was reporting on bankruptcy filings for the 12 months ending June 30. During that time, overall filings rose by 20 percent, with a total of 1.57 million cases filed, jumping from the 1.3 million seen in the previous year. According to the article, this is the highest rate of bankruptcy filings seen since 2005, when a new bankruptcy law drove a record number of filings.
The 2005 Bankruptcy Abuse Prevention Act put up more barriers for consumers seeking to file for bankruptcy. As a result, many people rushed to file before the law officially took affect that year, spiking bankruptcy filings. Directly afterward, filings dropped below pre-reform levels. But the article said the bad economy over the past two years has pushed them back up. Filings for the most common individual bankruptcies, Chapter 7 and Chapter 13, rose by 21 percent, or 1.51 million. Of those two bankruptcy types, Chapter 7 -- which is more difficult to qualify for under the new law --was up by 25 percent, while Chapter 13 was up by 10 percent. Business bankruptcies also saw a gain, but a much less dramatic one, with an eight percent increase totaling 59,608 filings. The article suggested that the economic recovery "has yet to find much traction."
You don't need to be an Orange County individual bankruptcy lawyer to know that. Observers of the financial news have predicted record-high bankruptcies for months, thanks to the recession, high unemployment and high rates of foreclosure. News reports have been touting good news for the economy for a while, but that news tends to focus on what Wall Street is doing. Because we work directly with individuals and couples far from the financial industry, we can see that any Wall Street recovery is not translating into a recovery for ordinary people. We hope that this is just a matter of time, and that unemployment and foreclosures will start to drop again, driving down bankruptcies. But in the meantime, individuals with substantial amounts of debt and other pressing financial problems should probably not assume that good news from the financial industry will be good news for them in the short term.
Howard Law PC helps individuals and couples through the major financial event in their lives that is a bankruptcy. Our Garden Grove personal bankruptcy attorneys encourage clients to come to us as soon as they realize their debts are far beyond their ability to pay. Many people delay bankruptcy long past that point out of feelings of shame or failure. Unfortunately, this can have substantial negative consequences for clients who run through retirement savings and other assets that might be protected in a formal bankruptcy, only to discover that they will end up in bankruptcy anyway. When clients come to us, we start by examining their personal financial situations closely to ensure that bankruptcy is truly their best option. If it is, we help them start the process, standing by them through deciding what type of bankruptcy to file, required financial education, court proceedings and any lawsuits against aggressive creditors who won't go away.
If you're considering bankruptcy as a way to deal with overwhelming debt, don't wait to call Howard Law for help. To set up a free, confidential consultation, contact us online or call 1-800-872-5925.