According to the American Bankruptcy Institute 675,351 consumer bankruptcy petitions were filed during the first six months of 2009. That’s a 36.5 percent increase from the first six months of 2008. Washington states the worst days of this recession are over and the economy is improving. I respectfully disagree. On a daily basis I see folks living in southwest Missouri who are suffering from job loss, reduction in workdays and elimination of available overtime. To compound the problem of wage loss, creditors are raising interest rates and reducing available credit limits. You may think the average filer is a spendthrift and someone who takes advantage of the system. Wrong. The typical filer has educational qualifications that are slightly higher than the rest of the population, and they work in a representative cross section of all occupations. About 90 percent have suffered a job loss, medical event or divorce. Many of us live paycheck to paycheck, so it is not hard to imagine how one of those events could seriously affect our financial situation. Even in 1934, the U.S. Supreme Court acknowledged that there has to be a safety net of sorts for the honest, responsible citizen. In an opinion written that year for Local Loan v. Hunt, the court said, “(Bankruptcy) gives the honest but unfortunate debtor… a new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of preexisting debt.” The goal then of bankruptcy is to rehabilitate the debtor. However, many people shy away from bankruptcy, enduring the loss of their homes, cars and cashing out their only retirement account because they think there is a negative stigma attached to filing bankruptcy, or they simply do not know enough to understand that our legal system does provide a lifeline. Research suggests that bankruptcy filings will continue to increase steadily. Of great concern in this overall trend is the disproportionate growth of women filers. In less than 20 years, filings by women have jumped nearly 800 percent. Women were the smallest group of filers then; now, women are the largest group. Experts point to rising consumer lending as one of the chief culprits of rising bankruptcy rates. Other factors include rising medical costs, lack of medical insurance, escalating divorce rates and the increase in single-parent households. Bankruptcy is not just for the desperate destitute or the prodigal celebrity. It is an option that many Americans consider the key to a fresh start. The average bankruptcy filer is more average than you would imagine.
For more information on bankruptcy, go to http://www.uscourts.gov/bankruptcycourts/bankruptcybasics.html