According to a research done by the American Bankruptcy Institute, consumer bankruptcy filings for the first half of 2010 were considerably higher than any six-month period since 2005. Consumer bankruptcy filings are up 14 percent to roughly 770,117 bankruptcy filings compared to the same period last year. This is the highest number of bankruptcy filings since the Bankruptcy Abuse Prevention and Consumer Act was passed five years ago. The American Bankruptcy Institute anticipates that there will be at least 1.6 million bankruptcy filings before the end of the year.
Are Bankruptcy Rates Up?
In June, bankruptcy filings dropped seven percent from the number of filings in May. Nevertheless, while the number of consumer bankruptcy filing went down in June, rates were still up 8 percent compared to June 2009. Studies estimate the average national filing rate to be 6,800 filings per million households in the United States.
With the highest unemployment rate in the country, Nevada also has double the national filing rate of bankruptcies with 15,000 bankruptcy filings per million households. The lowest bankruptcy filing rates in the United States can be found in Alaska, Washington D.C., and South Carolina. Each of the three states fall well below 40 percent of the national average.
The Causes of Consumer Bankruptcy
Experts blame the lack of a devoted savings plan, the increase in consumer debt, and economical difficulties for the rise in bankruptcies. This is often the formula that leads to consumer bankruptcy. Committing yourself to a savings plan is a good step in the right direction, as is cutting back on unnecessary spending.
Unemployment has also been a major cause of the decrease in consumer spending. With so many people plagued with financial insecurity, spending habits have decreased, but consumer debt is still on the rise. People have resorted to subsidizing their incomes with their credit cards in turn they are creating more debt with no way to pay it off. Instead of racking up debt with the purchase of a fancy new car, consumers have indebted themselves by paying their bills, buying food, and covering their medical expenses.
Your Consumer Bankruptcy Attorneys
If you are one of the projected 1.6 million bankruptcy filers, we can help. At McFarlin LLP, we offer free bankruptcy consultations to prospective clients. We aim to make your bankruptcy stress-free and help get you on your way to a bright, new financial future. Call us at (888) 728-0044 or email us here.