After the bankruptcy reform law – BACPA – went into effect in October 2005, consumer bankruptcies came to a screeching halt. Most people who were thinking about filing rushed to do so under the old rules. And the economy was still chugging along at a healthy enough pace that even those folks with a lot of debt could optimistically refinance their way into a false sense of security.
I remember having lunch a good friend who is a bankruptcy attorney towards the end of 2005, and at the time she was not sure what the future would hold for her profession. If I had a crystal ball then, I would have told her to go on a nice long vacation and rest up. A tidal wave of filing was building up. Now they are flooding in once again, and bankruptcy attorneys are working day and night to keep up.
A recent story in USA Today says that an average 6,000 new bankruptcy cases are filed each day, and the total number of consumer and commercial filings are expected to reach 1.5 million this year.
Those cases represent a lot of broken dreams and heartaches, as well as an enormous drag on businesses large and small as their customers default on the money owed. It's not unusual for one bankruptcy (especially large corporate filings) to bring down many smaller businesses in its wake.
Bankruptcy filings are known as a trailing indicator, which means that many of the filers have been experiencing financial problems for a while. Given our continuing unemployment figures and high level of debt, I don't see them dropping off anytime soon.
If you are considering filing for bankruptcy, understand the basics of how bankruptcy works and consider alternatives to bankruptcy first. Ultimately, though, if filing is your best option it's important not to procrastinate. A free expert consultation by a bankruptcy professional may help you avoid costly mistakes. It may not be pleasant, but bankruptcy may be your life raft if you're drowning in debt.