Written by Christopher Kramer
Fewer jobs, less income, more people filing both Chapter 7 and 13 bankruptcy; Unfortunately, this seems to be the formula that’s prevailing throughout the country.
As consumer bankruptcies rose to a level not seen since October of 2005, when the new bankruptcy law went into effect, the nation is still riding the few highs and plentiful lows of a troubled economy.
According to a report released Tuesday from the American Bankruptcy Institute (ABI), there has been a 34.3% increase in consumer filed bankruptcies as measured from the same period just one year ago.
Moreover, there has been an 8.7% increase since June of this year-- reaching a level of 126,434 bankruptcies in July.
Just within the month of July, 28.3% of the consumer bankruptcies filed were Chapter 13 bankruptcy cases .
Chapter 13 bankruptcy is when the filer agrees to an interest-free debt repayment plan to catch up on debts.
Chapter 7 bankruptcy is seemingly more common due to the very nature of it. (A successful Chapter 7 bankruptcy usually results in the filer’s unsecured debts being completely excused.)
The ABI Executive Director Samuel J. Gerdano spoke in a recent written statement about the correlation between rising unemployment and the already pre-existing high level of consumer debt, flatly remarking that this is an equation resulting in ever-increasing consumer bankruptcies through the remainder of 2009.
Gerdano’s impressions and findings seem to echo the sentiments of most in America that the troubled era of our economy is far from over.
As for the national unemployment rate it is at 26-year high of 9.5%.
With that, many indicators show there is no relief in sight.
In fact, according to a recent CNNmoney.com article: “The government released July jobs numbers on Friday [July 31], and unemployment is expected to rise to 9.6%, according to a consensus estimate of analysts polled by Briefing.com.”
Of those numbers, those who have jobs are not seeing an increase in their earnings, yet another sign that the economy is still deep within a struggle to regain prosperity.