Bankruptcy and the Economy

Bankruptcy and the Current Economy 

The current economy is driving up the number of bankruptcies.  It's driven by things like layoffs, medical bills,  and divorce. Bankruptcy filings are going to continue to increase over the next couple of years. Unemployment in America is on the rise reaching levels not seen in almost 30 years. We still haven't fixed the health care problem in the country and credit card companies are going to be more careful about who they are lending money. 

The revised bankruptcy law took effect three years ago -- on Oct. 17, 2005 -- and preceded a spike in bankruptcy filings, as people tried to beat the deadline before stricter requirements took effect, followed by a dramatic decline in cases. Now, things are heating up again in bankruptcy courts across the country.  Filings in Arizona and Nevada are at all-time highs and little relief is in site.

As the law moves into its fourth year of implementation, critics are clamoring louder than ever for a do-over on bankruptcy laws -- or at least a patch to fix problems that have come to light in the three years since its inception.  Many people don't understand the changes that the 2005 law brought to bankruptcy and several constituents feel that a change in the current bankruptcy law is a must. 

Many people feel that here we are three years later and the law did nothing to fix the underlying problem. There's still the same amount of distress on the American middle class and something needs to be done.  Some experts have analyzed bankruptcy filing data and predict, at the current pace of nearly 4,500 filings per business day in September 2008, the total number of filings will reach 1.2 million in 2009  That doesn't account for the current state of the economy.  You hear about it from all the media outlets, as a nation, we are in bad shape.  As long as the economy continues it's downward spiral, the number of bankruptcy filings will continue to rise.