When Economies Flounder - Bankruptcy Filings Rise

As the economy continues to stagnate, the number of personal and corporate bankruptcies is on the rise

. The tightening of credit and loss of home equity are two reasons for the surge, and the current upward trend is directly correlative to the recession, which some fear could dip again. Regardless of the reason, achieving the best possible outcome after making the decision to file is best when utilizing the services of a bankruptcy attorney. With their knowledge of local policies, legal contacts and overall expertise in the matter, they can get you through the proceedings as quickly as possible, and help you avoid making irreparable financial mistakes. Many people do not realize that once a bankruptcy is final, an individual cannot file again for another seven years, so you better get it right the first time.

While it's no longer breaking news, the floundering economy is still largely on everyone's mind. Rising unemployment, rising home foreclosures, mounting debt - together they have created the perfect economic storm for many individuals, businesses, even local and state governments. Caught in such as quagmire, more and more are using bankruptcy as a way out. The number of filings in the last year rose 21 percent from the previous year, at well over 1.5 million. Over a three-month period in 2010, more than 422,000 bankruptcy filings occurred, the highest quarterly number since 2005.

Both individuals and businesses that find themselves in financial peril have options, whether they are underwater on a house or simply unable to service their debt.

* Chapter 7 bankruptcy can protect individuals, especially homeowners, from facing recourse judgments against them in court. Lenders in recourse states may sue borrowers over short sale deficiencies or to recoup any losses from a foreclosure auction sale. Chapter 7 does not prevent foreclosure, but it will delay it. Sometimes, even in recourse states, a bankruptcy attorney can help you negotiate with a lender to prevent the deficiency judgment altogether. Chapter 7 allows for the discharge of debts allowing any individual the opportunity for a fresh start financially.

* Chapter 13 filing is possible for individuals who do not want to discharge all their debt, but instead need help negotiating with creditors in setting up a repay schedule, and putting an end to those harassing and annoying calls from collection agencies and debt collection departments.

* Chapter 11 proceedings are open to all businesses including corporations and sole proprietorships. While open to individuals as well, chapter 11 is favored by businesses because they are allowed to continue to operate and retain their assets as a "debtor in possession".

A first consultation with a bankruptcy lawyer is often free. This is the time to discuss options and decide on the best course of action for your unique situation. The total cost of hiring legal representation is surprisingly low - especially considering the ultimate savings once all is said and done. While costs will vary depending on where you live, who you hire, and the complexity of your situation, it is usually no more than $2,000. In most cases, within three to five months after filing, the bankruptcy is final, and you can move forward. The first step is talking with a qualified attorney. Getting one's financial house in order takes time and money, but the cost is a small price to pay for the peace of mind.

by: Stephen Daniels

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