According to a recent report from the American Bankruptcy Institute (ABI), the total number of bankruptcies filed in the third quarter soared 33 percent.
According to the data released by the institute on Wednesday, this number marks the highest level of bankruptcies since 2005.
Data from the ABI, Other Reports
According to the ABI report, 388,485 bankruptcies were filed during the third quarter. This number shows a significant increase from 2008 when in the same quarter 292,291 bankruptcies were filed. In other comparison data, filings for the first nine months of the year were said to have climbed 35 percent to 1,100,035 as compared to 2008′s filings of the same period, which were 841,496.
What’s Causing the Surge in Bankruptcies?
ABI executive director Samuel Gerdano noted in a recent CNN article that he believes the surge in bankruptcy filings can be attributed to today’s weak economy.
Also, Gerdano noted that the continued increase in unemployed workers (unemployment has recently surpassed 10 percent) is leading workers toward the need to file bankruptcy. With no money to pay bills and debt soaring by the month, more Americans are finding that their only option is to clear their debt and start over.
Are You Thinking of Filing Bankruptcy?
If you are drowning in debt and feel that filing bankruptcy is your only option, consider the following before making your final decision:
- It negatively affects your credit: A Chapter 7 bankruptcy could hurt your credit for up to 10 years. On average, it drops your score by around 200-250 points, so if your score is already low, a bankruptcy could ruin it.
- Not everything is protected/covered by bankruptcy: Some assets like your car or home may not be protected in a bankruptcy, meaning that either could be used to pay off your debts. Also, debts like back taxes and student loans are not covered. So though you may be freeing yourself from some debt, others you may still owe.
- You may not qualify for new credit: While a bankruptcy may solve some of your debt problems, it could prevent you from qualifying for necessary new credit, including auto loans, mortgage loans, credit cards and more.
Before you decide to file bankruptcy, it’s important that you speak with a credit counselor to make sure you’ve explored all other avenues. The benefits of bankruptcy are often few compared to the challenges you could be faced with down the line.
Have you considered filing bankruptcy?
