Bankruptcy

Bankruptcies Expected to Hit 1.4 Million for 2009

By Meaghan Olson

All those who think the economy is on the mend and those in jeopardy of bankruptcy can take a breath of relief, please raise your hands   ?    no one?

Well, you would be correct.

Even though there are statements by our current administration that the economy is showing clear signs of recovery, there is still the malignant fact that both personal and business bankruptcy filings are on the rise.

Think Philadelphia

In fact, in a recent article by USAToday and Bloomberg News there is a gargantuan estimation at just how large these figures will reach by the end of the year:

?Bankruptcy filings may hit 1.4 million? by the year?s end.

1.4 million, that?s more than the population of San Antonio, Texas and roughly the population of Philadelphia, PA - the city of brotherly love.

It seems there will be significant love lost as the toll of bankruptcies continues to rise.

As loans continue to remain hard to acquire, jobs continue to be lost and personal debt finds no relief, more folks will be filing bankruptcy.

We Need Jobs to Get Out of Debt

To underscore this point, the ABI (American Bankruptcy Institute) released a statement from which many news wires have used in their articles surrounding these facts:

?Personal bankruptcies show no sign of abating after rising more than a third this year and may hit 1.4 million by Dec. 31 as jobs are lost and loans are harder to get.?

When the facts are reviewed, there is a clear sign that relief is far from in sight.

Consider that during the first six months of 2009 the total number of U.S. bankruptcies filed increased 36% year over year.

That?s over 189,000 new personal bankruptcy cases filed in just 6 months from the previous year. Why is this?

According to ABI Executive Director Samuel Gerdano, it?s because of the increasing unemployment coupled with pre-existing debt.

?Rising unemployment on top of high pre-existing debt burdens is a formula for higher bankruptcies through the end of this year,” Gerdano said in a statement.

Although these figures seemingly take the air out of our nation?s sails, the even more frightening thing is that they don?t even touch on our country?s business related bankruptcies.

Don’t Forget About Businesses Filing Bankruptcy

For the same time period, business filings totaled 30,333. This represents a 64% increase over the first-half 2008 which totaled 18,456 cases.

Segmenting this figure, it is found that chapter 11 business reorganizations increased by 113% (7,396 compared to the 3,470 from 2008), and Chapter 7 bankruptcy business liquidations increased to 20,375 which was a 57% increase over the 13,002 filings from the same 2008 time period.

So it seems while certain figures can be released in an effort to cast a more favorable light on our current economic plight, possibly in an effort to prod consumers to spend more, maybe to encourage employers to get back on the hiring wagon or simply to offer a glimmer of hope for those close to the edge, it cannot hide the facts.

What is failed to be considered in these veiled attempts is that numbers don?t lie and we, as a nation, are far from separated from the disastrous financial uncertainty which will define this period in our nation?s history.

Full post as published by The Bankruptcy Blog on August 19, 2009 (boomark / email).