Bankruptcy Debt Requires a Good Bankruptcy Lawyer

Toledo, OHThe financial meltdown of 2008 has had a huge impact on bankruptcy. Not surprisingly it's up—way up, as bankruptcy debt stemming from the lingering fiscal crisis of last year sent Americans fleeing to their bankruptcy lawyer with the prospect of bankruptcy debt settlement as the only means to survive such troubled times.

And those troubled times continue for a lot of folks, according to the Boston Globe. On October 3rd it published a Bloomberg News report that US consumer bankruptcies soared beyond one million through the first nine months of this year.

The numbers tell the tale. Since January alone personal bankruptcies totaled 1,046,449—the highest since 2005, when the figure for the same period hit 1.35 million.

"Bankruptcy filings continue to climb as consumers look to shelter themselves from the effects of rising unemployment rates and housing debt,'' said Samuel Gerdano, executive director of the American Bankruptcy Institute.

It's a national story that is also played out in the regions. In Ohio, for example, the rise in bankruptcy filings appears to be keeping pace with the national average. However the number of Chapter 13 bankruptcies is falling in Ohio, given that the proportion of people seeking to repay their debts rather than liquidate is on a sharp decline.

The October 2nd issue of The Blade, published in Toledo, reference experts who say the trend stems from fewer jobs and more people under financial duress without income or the capacity to work out a plan to repay their financial obligations over the long term.

There was a time when the preference would be to file for Chapter 7 bankruptcy and liquidate, rather than repay. So in 2005 federal reforms made it tougher to qualify for Chapter 7. That's one of the reasons why the bankruptcy rate was so high in 2005. That year a record 2.1 million Americans filed for personal bankruptcy, with 630,000 Americans alone seeking court protection in the two weeks before reforms were enacted.

Americans who were struggling financially were hoping to get into the Chapter 7 queue before the rules changed.

Now, Chapter 7 bankruptcies are on the rise again. But this time, Americans just don't have the money. They don't have a job and companies are still not hiring. They would file Chapter 13 and pay back what they owe if they could.

But they can't.

Last month personal bankruptcies hit 124,790 in the US. The Bankruptcy Institute calls that figure the fourth highest in a single month since 2005, and up from 88,663 over the same period a year ago.