The last record was set in 2005. That record was set because bankruptcy laws were being tightened up and people wanted to file before the laws changed. (The big banks had convinced congress to make it harder for debtors to get relief.)
The number of bankruptcies filed in 2010 reached 1,530,078. That was an increase
of 8.7% over 2009. Even though the economy is starting to show signs of a recovery, people still need relief from debt.
“The 2005 law was supposed to reduce filings, but we are very close to levels we were at then,” said Samuel J. Gerdano, Executive Director of the American Bankruptcy Institute. “The laws of economic gravity are more powerful than the laws passed by Congress.”
I can’t agree with him more. Here are a few tips if you are considering bankruptcy.
Tip #1: Sometimes not filing bankruptcy at all is preferred to a Chapter 13 Bankruptcy filing. Let me explain why.
A Chapter 13 is basically a repayment plan. Very few debts are wiped out. In addition, your whole financial life is placed in the hands of a bankruptcy trustee. They oversee all your finances so you can attempt to repay everyone.
Contrast this with a Chapter 7 Bankruptcy where you can erase debts you can’t afford.
Tip #2: When you interview bankruptcy lawyers, ask about their ratio between Chapter 7 filings and Chapter 13 filings.
A good bankruptcy lawyer will be able to help you file Chapter 7 and avoid a Chapter 13 bankruptcy.
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