Trends in Bankruptcy and the Economy

Where is the US market going? Beliefs vary from doomsday prophecies to cautious expectations. However, even as an election year approaches and information "spin" begins to ramp up from news agencies, it's clear that the economy remains to be not doing well. I consulted an experienced somekeyword and this is what I found.

Surprisingly, bankruptcies are lowering nationwide. Signaling what could be a nationwide trend, the U.S. Bankruptcy Court for the Western District of New York reported a 17.5 percent drop in bankruptcy filings in Buffalo and Rochester. While numbers for Manhattan and Suffolk counties haven't been cited yet, the National Bankruptcy Research Center and American Banking institute announced a nationwide drop nearing 8 percent during the first half of 2011.


What exactly does all this mean? Is the economy really getting better? Must we be hopeful? If the credit crunch and nationwide debt are taking such a toll nationwide, why aren't bankruptcies skyrocketing?

The typical opinion, however, is that recent downward trends in bankruptcy aren't a signal of a strengthening economy. Foreclosures in the US have slowed down to a crawl: new regulations designed to curtail foreclosure-happy banks have terrified lenders. The majority of citizens that choose bankruptcy do so to protect a home. Also, there's an general decline in credit creation: because the economy's in such bad shape, Americans want to spend less money. Finally, the cost of going bankrupt is prohibitive, forcing most Americans to find other means to survive financially.

Even the Federal Government is getting in on the fact that a large number of banks violated the law during the homeowner credit crisis. As the government rose to defend the rights of homeowners, regulations were developed to protect them: and they worked. Banks have become not only terrified to lend, they're terrified to foreclose. It's become an unfortunate catch-22 for those who wish to purchase property. In addition, the situation has lowered foreclosures, and lowered the desire for Americans to file for for bankruptcy to protect their home.

Americans are spending less. Overall, consumers have wised up, and are enduring the economic chaos by not spending as much. Less homes, fewer boats, fewer cars, fewer motorcycles, fewer flat-screen TVs--fewer overall big-ticket credit items are being obtained nationwide. Consequently, Americans have less in the way of assets to protect, making Chapter 7 a less inviting answer for financial debt problems.

The government has made it harder to declare bankruptcy. The means test is a difficult task to accomplish without a lawyer.

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