Bankruptcy Filings Increase As Economy Suffers

Layoffs and pay cuts moved more people into bankruptcy last year, and researchers are asserting that the situation is most likely not going to improve until the unemployment issue improves. In Wisconsin, bankruptcy filings rose 30 percent in 2009. This came on top of a 35 percent increase in the preceding year.

According to bankruptcy lawyers, it is not just firings and layoffs that are motivation to file. It’s the losses of once-regular over time pay and full time status that have left consumers from keeping up with monthly payments that in the past were not an issue to pay.

U.S. Bankruptcy Court records reveal that there were 27,413 bankruptcy petitions filed in Wisconsin last year. More than 80% were Chapter 7 cases. Chapter 7 cases wipe out medical bills, credit card balances, and other types of debt. Recent Research by The Associated Press illustrated that more than 1.4 million bankruptcies were filed in 2009, an increase of about 32% from 2008.

And although bankruptcy annihilates the looming debt and offers consumers a fresh financial start, people often remain unemployed and are unable to find employment to get an adequate income again.

Worse still, unless the economy improves enough for companies to start hiring, there is little reason to think that bankruptcies will go down in 2010. Experts have noted that home foreclosures will continue to pile up in 2010 because people who previously had adequate credit have lost employment and cannot keep up with payments.

Bankruptcy may seem like a good option to get a fresh start, but it negatively affects your credit report for ten years, rendering you unable to get a car, place of residence, or employment. Before declaring bankruptcy, it is a wise decision to speak with your creditors and see if some sort of repayment plan can be worked out.

Mallory Megan is an employee at a debt collection agency. She also does articles on the credit industry, business, finance, and debt collection.