Wednesday, May 27, 2009

Bankruptcy Filings are up, up, up!

The Associated Press reported that the number of individual (consumer) and business bankruptcies are up again this year. This increase is despite a 2005 Bankruptcy Reform Act that endeavored to make it much more difficult for individuals to file for their Federal Bankruptcy Protection that has been around since the beginning of our country.

According to court records analyzed by the AP last month, in the past 12 months more than 1.2 million people filed for bankruptcy protection. Bob Lawless, a law professor at the University of Illinois College of Law predicts that there will be 1.5 million bankruptcies this year, followed by 1.6 million next year. In Broward, Palm Beach and Miami-Dade counties 2,007 people filed for bankruptcy in March of this year.

In a speech to Consumer Bankruptcy Attorneys by Scott Forgey, citing current unemployment intensity of both numbers and durations, and extrapolating from the NAFTA bankruptcies that his firm filed in the 90's in the mid west, Scott expects that the number of filings will be nearer to 1.5 million for the next five to seven years. That the economy may turn around in 3 years is years too late for the average worker.

Most workers and consumers have less than a 3 month cash reserve, instead relying on credit. Workforce One of Broward County confirmed that most employees that are unemployed past 3 months after any severance pay are beginning to miss payments and are in danger of defaulting on major items, like mortgages.

There is no safety net. Credit Cards debt is the worst of all possible solutions to most of the desperate, but it is their last solution. The new legislation will do nothing to stop the increase of unsecured and high interest loans that people turn to as a last resort.

Who is going to help the working class?

What is going to happen to all who feed on their consumer spending?

With the working class officially bankrupt, the domino effect is inevitable.