Bankruptcies Rise Again February 2010

More consumers are filing for bankruptcy even though the government states the US is in the recovery phase of the recession. February of 2010 saw an increase in bankruptcy filings of 14% over the February 2009 numbers and 9% higher than January of 2010. The February filings reached 111,693, clearly not indicating Americans are having an easier time surviving financially.  Moreover, the kind of bankruptcy being filed is more often Chapter 7, which allows all unsecured debts to be discharged, including credit cards.
Samuel Gerdano, American Bankruptcy Institute executive director reasons, "The debt-stress overhang from years of consumer spending has a more acute impact now because of troubling economic times.” This very well may be a contributing factor. The loss of jobs or reduced hours and/or pay coupled with rising gas prices certainly isn’t helping the average American in debt, however, what about the huge raises in credit card interest rates, over limit fees and the fact that creditors have reigned in access to available credit even though they have been “bailed out” and have returned to granting huge bonuses to high level executives.
Whether you believe Obama’s administration is or is not taking the necessary steps to implement the changes necessary to bring America into financial recovery, what is the banking industry themselves doing to fix the mistakes they have made and the problems their greed has caused.
In 2005 when more stringent bankruptcy laws went into effect it was supposed to force more families into Chapter 13, or the repayment bankruptcy whereby most debts are repaid at a certain percentage over several years. The American Bankruptcy Institute states the number Chapter 13 bankruptcies decreased by 3% from January 2010 to February 2010. Generally anyone who owned a home had to filed Chapter 13 in order to save their home, however with so many homeowners “under water” or “upside down” on their mortgages whereby they owe more than the value of the property, many do not see any point in a Chapter 13 to save the home. Tossing the property into the bankruptcy and being rid of it is a better option.
Also important to note: bankruptcies were up by 32% from 2008 to 2009 according to the Administrative Office of the U.S. Courts. Chapter 7 filings were up 41% in 2009 while Chapter 7 filings rose just 12%. The bankruptcy rate has risen each year since the law was changed in 2005. "We are already on a faster pace in 2010 than we were a year ago," Gerdano says. "Consumer filings will likely surpass 1.5 million filings this year." From those numbers it is easy to surmise the 2005 bankruptcy overhaul isn’t providing the changes or relief that was hoped for, on a multitude of levels.
Bankruptcy can present a hard blow to not only ones finances and credit score but also to one’s self esteem and outlook on the future. No one wants to see their name in the local paper under “Bankruptcy Filings” or deal with the humiliation of friends and family finding out. When credit card debt gets out of control there are other options and the one which can provide the most relief, quickest and with the least embarrassment is debt negotiation. Negotiating an outstanding balance down to pennies on the dollar, paying it off without the entry of a bankruptcy on one’s credit report (or in the public record) can provide relief and fresh start. For more information from a credit card debt negotiator, get a free consultation from the debt negotiation experts at www.CreditCardDebtNegotiator.com, call (614) 453-5963, or email Consult@CreditCardDebtNegotiator.com.