Bankruptcy filings are up - but this isn't necessarily dire economic news. The Economist used this chart to show the trend. See the spike in 2005? That was right before bankruptcy reforms were introduced. Many people rushed to file prior to that in anticipation that they would not be able to file later. Well, it's taken some time, but we're really just right back where we used to be. It takes any industry - and in this case, the bankruptcy industry - time to recover from reforms. Believe me, bankruptcy attorneys and businesses have spent the past five years researching ways around the new reforms, and it's taken five years, but they've apparently found them.
Here's what The Economist says about this:
BANKRUPTCY filings rose 20% in the year to June 30th compared with the previous 12-month period, according to statistics released on August 17th by the Administrative Office of the US Courts. This takes quarterly filings to their highest point since tougher bankruptcy laws were introduced at the end of 2005. That change brought a spike of bankruptcies, as companies and individuals rushed to declare themselves broke under the more lenient old regime. The data suggest that an older trend is reasserting itself. This could be more bad news for America—or it could just mean that creative destruction is alive and well.
We're agreeing with that last part of The Economist's post: creative destruction is alive and well.
And, as always, let this serve as a reminder not to amass too much debt, even when times are good.
http://www.economist.com/node/16843119?story_id=16843119&fsrc=rss
There is just no easy way to get out of debt. You have to face up to the consequences.
ReplyDeleteYou need alternatives because bankruptcy is not always the answer, especially if you are a first time home buyer thinking about buying that first home, as the effects are long lasting. Plus the new law has made it even harder to file bankruptcy. There are four ways to handle debts that are out of control. They are listed in best to worst with regards to the effect it will have on your credit report.