The National Bankruptcy Research Center reported that there were 135,914 bankruptcies in October, up 9%. One third of the bankruptcies were filed under Chapter 13. Chapter 13 requires that the court set up a five year repayment plan for debts owed.
In addition business bankruptcies were up 7% for the same period.The forecast is for 1.4 million bankruptcies in 2009, the highest since 2005. In that year Congress revamped the bankruptcy laws to make it more difficult to wipe out all of a person's debts. There was a rush of filings in the months just before the new law was enacted.
We already know that the main cause of this high bankruptcy rate is unemployment. But there are other factors coming together to force people into bankruptcy. Home prices are falling and many people are 'upside down" in their mortgage. They owe more than their house is worth. Many of these owners also have home equity loans in addition to their mortgages which is putting more pressure on them. Then add to the mix higher interest rates, especially on credit cards and lines of credit being cut and you have a devastating set of circumstances making it all but impossible for some owners to pay their debts.
Analysts believe that bankruptcy rates will decline when we have an uptick in employment. That may be some months away, since figures out today estimate that we've lost 203,000 jobs in October. We now have about 15 million unemployed.
Do you have ideas for putting people back to work?











Reader Comments (Page 1 of 1)
11-05-2009 @ 5:21AM
al coholic said...
How about cutting unemployment benefits back to the original maximum of 13 weeks?
Milton Friedman wrote "Free to Choose" years ago but it is still a good read. In the book he interviewed a bunch of people on unemplyment and asked this simple question, "If your benefits ended tomorrow what would you do?" The overwheming majority answered that they would find some kind of job somewhere.
Unfortunately a lot of folks think unemployment checks give them the option to be picky about what they do to earn money. While they are pretending to get work in their field they often work under the table which allows them to net more than they did when they worked. So they don't kill themselves looking for a job until the last check comes, thereby cheating all the rest of us.
Welcome to socialism, America.
11-05-2009 @ 5:41AM
Dan Barnett said...
Harsh al.
The economy is shedding jobs, so I'm inclined to think that "find(ing) some kind of job somewhere" isn't as easy as you make it sound.
Also I don't see that stopping unemployment benefits, and thus dropping some people's income to zero, will benefit anyone. Even the bankruptcy lawyers need their fees up-front.
11-05-2009 @ 5:56AM
lou said...
So tell me Al, are you hiring?
11-05-2009 @ 6:25AM
Betty said...
Bankruptcies will hurt the banks but the people who had to file will be out there spending again but this time with cash and not credit cards. The main street stores will definately benefit.
11-05-2009 @ 7:23AM
Rod said...
I'd say we should get ready for round two of this recession. Except I'm guessing this part might take quite some time to over come.
11-05-2009 @ 8:10AM
Ernest said...
Yep I have an idea for putting people back to work. How about close our trade border to cheap imports and illegal workers. Bring back manufacturing to his country. Stop the wars in all these freaking countries and invest that money in hiring more teacher’s, police and fire fighters. How about lowering everyone’s taxes by 25% and government stop pizzing away tax money to bankers who are not giving out small business loans but who are just hording the money. And stop giving us lip service and pass some freaking bills that the people want that creates and protect our jobs in this country.
11-05-2009 @ 1:32PM
Iridium said...
Medical bills are still the #1 cause of bankrupcy behind unemployment.
You can have great insurance but still be forced into bankrupcy becuase of the insanity of medical billing. Go to the ER for a day and even with a 10% copay you could still owe over $5000.
The hosiptal may have been paid over $40,000 from the insurance company for a case of heartburn you thought was a heart attack. But still the greedy scum want that extra $5000 from you. They won't stop until they get it.
Hospitals believe they are entitled to get $120 for a single Tylenol pill, $1300 a day for a room, $30,000 to deliver a baby.
Nothing will change until hospitals are required to justify thier costs. Right now every person that walks through the door is a blank check.
11-06-2009 @ 5:35AM
al coholic said...
Yes, it is hard (but not impossible) to find work these days. My point is that many people on unemployment don't try very hard to find a job until they realize there is no more free cash coming. It's just a matter of human nature.