Hard Times and Bankruptcy
Hattip to Ed Morrissey at Hot Air. As regular readers of this blog know, I am, for my sins no doubt, an attorney. I was examining the year end stats for my practice, and I noticed that the legal fees I derived from my bankruptcy representation of creditors and debtors almost doubled in 2009 over what they were in 2008. Therefore, I was little surprised to read that bankruptcies were up 32% in 2009.
U.S. consumers and businesses are filing for bankruptcy at a pace that made 2009 the seventh-worst year on record, with more than 1.4 million petitions submitted, an Associated Press tally showed Monday.
The AP gathered data from the nation’s 90 bankruptcy districts and found 1.43 million filings, an increase of 32 percent from 2008. There were 116,000 recorded bankruptcies in December, up 22 percent from the same month a year before.
The top ten causes of bankruptcies in my experience:
1. Unemployment-I saw this much more last year, and I believe it is the number one factor driving the increase in bankruptcies. A few months of reduced income on unemployment pushes a lot of individuals carrying a fair amount of debt into bankruptcy. What a pig of an economy!
2. Divorce-I tell my clients that divorce and bankruptcy go together like bread and butter. Take two individuals who are barely making it financially and have them part ways, and two bankruptcies are often the result.
3. Overspending-A hardy perennial. Too many people use their credit cards to live well beyond their means and get sucked into money dissolving ventures like time-shares. It also often astounds me the type of cell phone bills people run up.
4. Too much house- If you are earning $30,000.00 a year, a $1500 a month mortgage payment is simply not going to be feasible.
5. Too much car-I have often seen families earning $45,000 or under a year trying to manage auto payments totaling $1300 or more a month.
6. Death– My heart goes out to individuals who find themselves bereft of the main breadwinner and who swiftly find themselves in bankruptcy.
7. Gambling-The way to make a small fortune gambling is to start with a very large fortune. Running up huge credit card balances and blowing the money on gambling is a quick ticket to bankruptcy court.
8. Bad business venture-You may like being self-employed, but taking on huge debt in a new business, or an old business that is heading down the tubes, is rarely a smart move.
9. Medical-In about 3% of my bankruptcies people are simply overwhelmed by medical debt.
10. Litigation -Going to court is very expensive, and many people have ended up seeing me after going over their heels in debt prosecuting or defending a lawsuit. Blood sucking leech lawyers!
I’d put in more information regarding bankruptcy, but I have to run. I am spending the day at bankruptcy hearings.