After three straight months of declining bankruptcy filings, the Wall Street Journal reported August 5 that July saw a fairly big increase. As Ontario personal bankruptcy attorneys, we're sorry to see more families suffering financial problems, but we're not surprised to see a reversal. According to the article, July saw an increase in consumer bankruptcy filings of 9% compared to July of 2009, and also 9% compared to June. The source of the numbers, the American Bankruptcy Institute, says there have been 908,000 filings so far this year, up from about 802,000 at the same point last year. The ABI says filings are on track to top 1. 6 million this year, which would set a new record. Last year, there were 1.4 million consumer bankruptcy filings, which itself was a record high for filings since Congress passed the bankruptcy reform law in 2005.
As with all of the high-filing months in 2010, observers said July's numbers suggested problems with the 2005 reform act. That law was intended to reduce bankruptcies by making it harder to file for Chapter 7 bankruptcy and requiring certain extra steps, such as credit counseling. Instead, bankruptcy filings have risen as the economy has declined, the article noted. A law professor noted in the article that people living on the edge or with high debts typically can't borrow anymore during a recession, as lenders tighten their credit standards. Interestingly, an accompanying blog post noted, one major trouble spot appears to be the Atlanta suburbs, which contained six of the top 10 counties for number of filings. Others were Riverside and San Bernardino Counties here in California, as well as Clark County, Nevada (Las Vegas) and Shelby County in Tennessee.
As Corona individual bankruptcy lawyers, we wouldn't be surprised to find out that those six Georgia counties have unemployment and housing problems similar to those faced by Californians in the Inland Empire. As we have noted many times before, bankruptcy filings tend to cluster in areas where there are other economic problems, including high rates of unemployment, severe drops in real estate value and a high number of foreclosures. All of these apply to Riverside and San Bernardino Counties at the moment, unfortunately, although observers seem optimistic about a real estate recovery. In suburban Atlanta, the blog post notes, delinquency rates are higher than the national average on mortgages, bank cards and auto loans. The article also notes that other areas of the South had below-average bankruptcy rates, leading one professor to suggest that their weaker connection to the financial industry has helped them bounce back faster.
At Howard Law PC, we help clients who are considering bankruptcy as a way to deal with debts they believe they cannot realistically pay off. Many people come to us very late in their financial woes, after struggling emotionally with the decision to file for bankruptcy. We do not believe those people should be ashamed, because bankruptcy is sometimes the most rational choice to handle a situation that is not completely under control. Our Costa Mesa consumer bankruptcy attorneys help clients determine whether they truly need a bankruptcy, then stand by them throughout the process. We can explain the differences between Chapter 7 and Chapter 13 bankruptcy for filers who have a choice, and, when necessary, protect clients from debt collectors that violate the automatic stay on collection calls.
Howard Law offers free, confidential consultations, so you risk nothing by speaking to us about your case and your options. To learn more or schedule a meeting, call us today at 1-800-872-5925 or send us a message online.