Is Bankruptcy Only for Deadbeats?

In years past, bankruptcy had a stigma that would cause "regular" people to to look down their noses at those who declared bankruptcy as either deadbeats or people trying to beat the system. But visit a bankruptcy court today and you may find yourself surprised at the large numbers of "regular" people who are there every day attempting to get their financial lives back on track.

The Great Equalizer

You will see a cross section of America in bankruptcy court; from white-haired disabled grandmothers to a young father who has been out of work for 8 months...all ages and races. Thanks to our troubled economy, bankruptcy court is as much an example of the great American melting pot as New York City was during the height of the immigration era a century ago.

Statistically Speaking

In May the US Court system released some sobering statistics about bankruptcy in America covering the 12 month period from April 1, 2009 to March 31, 2010:

• Total bankruptcy filings (business and personal) were up 28% over the previous 12 month period
• There were 1,100,032 Chapter 7 filings during that 12 month reporting period, which reflected a 34% increase over the previous 12 months
• There were 415,966 Chapter 13 filings during that 12 month reporting period, which reflected a 12% increase over the previous 12 months

The 12 month period that ended March 31, 2010 had the highest number of total bankruptcy filings since 2006, which was right after the bankruptcy reform law called the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) took effect.

Farmers and Fisherman

Another telling statistic is the one about Chapter 12 bankruptcy filings. You don't hear much about Chapter 12 because is applies only to family farmers and family fisherman, but consider for a minute their place in our economic society. Chapter 12 bankruptcies rose a whopping 65% for the 12 months ending March 31st. More than 600 family farmers and fisherman have had to declare bankruptcy during that year.

So, if you are still thinking bankruptcy is only for "deadbeats" think about the farmers and fisherman. As hard as they work to eke their livings out of the ground and the ocean, they certainly don't belong in a category called deadbeats. Yes, bankruptcy is sometimes caused by frivolously overspending and having it catch up to you. But more often bankruptcy results from devastating changes in a person's financial circumstances including:

• job loss
• prolonged unemployment
• skyrocketing interest charges at the first missed payments on unsecured debt
• medical disability
• loss of spousal support or child support 
• under insured with high medical expenses, including prescription drugs

Seek Legal Advice

Bankruptcy isn't for deadbeats. In fact, it takes a great deal of courage and determination to see the process through and deal with your debts. Talk to an attorney today. An experienced bankruptcy attorney can explain your options, the laws in your state, and can help you decide if bankruptcy is the right choice for you.