Bankruptcy filings are increasing and will most likely top 2009 number of 1.4 million

1277800997h0y8zD.jpgPersonal bankruptcy rose 9% in July according to the Wall Street Journal. That is a anumber of close to 138,000 in one month leading me to believe that 2010 will be the highest number of filings in five years. 2009 saw 1.4 million people file and we are already at 900,000 for 2010. For people who have had the credit rating reduced and are having a hard time finding a credit source, bankruptcy becomes one of the only ways to get out of a financial mess. The 2005 bankruptcy changes have had little impact in terms of reducing the number of filings. The main purpose was to force people into chapter 13 but creating the means test and the % of chapter 13’s have not drasstically changed and many people still qualify for chapter 7 relief.

California has almost jumped 30% in the nmber of filings as opposed to a year ago. With Riverside County having 15% unemployment I don’t see the trend stopping any time soon. One out of every 125 households has filed for bankruptcy protection in the last year. It is beoming apparantly obvious that bankruptcy has lost some of the stigma that was traditionally associated with it. My opinion is that it inevitably becomes a stimulous to the economy since consumers get to spend again instead of putting all there money into interest fees that have skyrocketed even while banks are borrowing money at less than 1%. 70% of our economy is based on consumer spending and sometimes being able to walk away from deficiency judgments and potential wage garnishments is better than contributing to bank profits when the banks are failing to put that money back into our communities. If you are paying to much in interest rates or are facing foreclosure or other financial problems, talk to a California Bankruptcy attorney who practices in all the federal districts.

Frequently Asked Questions: Debt Consolidation in California
How does debt consolidation affect credit scores?

Initially, it might cause a slight dip due to credit inquiries. However, consistent payments can improve your credit score over time.

What is the difference between debt consolidation and debt settlement?

Debt consolidation involves taking a new loan to pay off debts, while debt settlement is negotiating to pay less than you owe. Settlement can negatively impact your credit score.

What are secured vs. unsecured debt consolidation loans?

Secured loans require collateral (like a house or car), usually with lower interest rates. Unsecured loans don't require collateral but typically have higher rates.

Is debt consolidation right for me?

It depends on your total debt, interest rates, credit score, and payment capability. It's suitable if you can pay off your debt within five years and secure a lower interest rate than your current debts.

Should I consider long-term financial planning?

Yes, debt consolidation should be part of a broader financial strategy including budgeting, cutting expenses, and building an emergency fund.

How do Chapter 7 and Chapter 13 bankruptcies in California differ?

Chapter 7 involves liquidating assets to pay off debts, while Chapter 13 allows debt restructuring over a set period, usually three to five years.

Can my spouse's bank account be garnished for my debt?

Bankruptcy laws offer protections against such actions, but specifics depend on individual cases and state laws.

How can I learn more about my options?

Consulting a California bankruptcy attorney can provide clarity. Firms like The Law Offices of Christopher Hewitt offer free consultations to explore debt relief paths.

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