The American Bankruptcy Institute (ABI) reports that there have been 1,046,449 consumer bankruptcies filed in the United States in the first 9 months of 2009. This is the first time since the numbers have been this high since 2005 when there was a mass rush to file before more stringent bankruptcy laws forced more of those filing to reorganize rather than receive dissolution of debt. As unemployment rates continue to rise, it is expected that this number will continue to rise until as late as 2011 before leveling off.
In a bankruptcy proceeding, you may be forced by the court to liquidate some assets to pay back part of your debt. Since bankruptcy is public record and will remain on your credit report for 10 years it will make obtaining new credit, insurance, living quarters, and even basic utilities more difficult to get. Some employers also will look negatively at a recent bankruptcy.
Bankruptcy is not always the right answer. Many people have a tendency to panic in tough economic times and do not stop to think of the long term implications of filing. It should not be taken lightly. In many cases debt counseling and debt consolidation is a much less invasive form of seeking relief from overwhelming debt that can save you from irreparable damage.
Regardless of whether the national indicators show the economy as on the upswing, the American people will need time to recover completely. Some will, indeed, have to file for bankruptcy. For others, it will be a matter of holding on, making do, and slowly regaining their footing. Don’t hold on until there is no recovering, but don’t jump on the bankruptcy bandwagon before you need to. Other options may be available.
Tags: bankruptcy, Personal Debt
