“Bankruptcy filings drop, backlog of cases looms," reads the headline of the Albany, New York Business Review.” It’s not just New York, the reporter explains: Every state has seen bankruptcy drop, according to the National Bankruptcy Research Center, the Review adds.
On the face of it, this article sounds as if it’s bringing good news. The conclusion we’re driven to is that to the extent the economy is looking better, fewer people need the bankruptcy safety net to give them relief from debt. But, like every statistic, this one about falling numbers of people filing individual bankruptcy and small business bankruptcy can be misleading.
The Gazette in Iowa mentions that one factor may be the tightening up of credit by banks and credit card issuers. With less access to credit, the reasoning is, Americans are having less trouble paying off debt.
After more than twenty-six years offering Indiana bankruptcy help, I don’t see it that way. The same factors that, over the years, have brought people into the Zuckerberg bankruptcy law offices to seek advice and help haven’t gone away:
- Unexpected loss of a job or at least a cutback in work hours
- Unexpected medical expenses for a family member
People still share with me their need for payday loan debt help, help to stop foreclosure on their home so the kids won’t need to change school districts, their problems with lawsuits and judgments being filed against them, cars that have been repossessed, and child support that hasn’t come in as promised. None of that has changed.
What do I think is going on? I think that people are looking for “cheap” bankruptcy alternatives. I think many unsophisticated debtors think that having a “debt management program” will somehow look less unappetizing on their credit report than filing personal bankruptcy in Indiana. But, as the NOLO website so rightly explains, a debt management program has no protection: any one creditor can pull the plug on your plan at any time, whereas with a Chapter 13 bankruptcy, if you miss a payment, bankruptcy law protects you from collection actions.
And, as one of my Columbus bankruptcy lawyers always points out, many people did, in fact, file bankruptcy during the recession years, and are under the mistaken impression that you can only file once for bankruptcy protection. In fact, only a few short years after getting a discharge from one bankruptcy, another can be filed.
A third factor in the “decline” in bankruptcy filings is that people think they can’t afford to file bankruptcy. I think that’s a drop-out or cop-out. As billsbills.com puts it – Can you really afford not to get your life back?
Categorised in: Bankruptcy Indiana
This post was written by Mark Zuckerberg