Personal bankruptcy filings in the US continue to rise in 2010. Some experts believe we are on pace to exceed 1.7 million filings by year’s end, which is close to the all time record of about two million filings in 2005 before the Bankruptcy Reform Act took effect. The revisions to the code were intended to curb the number of filings by making the bankruptcy process more restrictive, burdensome and expensive. At the time, powerful bank and credit card lobbies persuaded Congress to pass the changes to reduce so-called abusive filings. Few bankruptcy attorneys and judges thought the reforms were a good idea, and now in the wake of the lingering recession and housing crisis, it seems more clear than ever the changes were “bad medicine.”
But the bankruptcy filing statistics only hint at the real depth of the problem. Perhaps even more troubling is the growing emergence of a group of Americans who are in serious financial distress but can’t be helped by filing for bankruptcy. This group of debtors are forced into what is known as the “shadow economy” or informal bankruptcy. It is common now for young adults facing crushing student loan debt and a hostile, shrinking job market. Under current bankruptcy law, student loans are very rarely discharged.
Another situation where individuals facing financial hardship fail to file for bankruptcy involves homeowners trying to hang onto their homes in the face of lower wages, declining market values and higher monthly mortgage payments. Chapter Seven is simply not very helpful in this circumstance. Chapter Thirteen can help homeowners catch up on mortgage arrears but does not offer a complete solution to the problem. A complete solution would entail granting bankruptcy judges the power to modify the mortgage principle. However, recent reform efforts in this direction have failed, even though these changes have the potential to avert the tidal wave of foreclosures that have rocked the financial sector over the past three years.
For further reading on this topic, see this recent article from USA Today, “Only a fraction of those in need file for bankruptcy.“
S.O.S. — Save Our Shelter!
The Sacramento County Animal Shelter needs your support today! Due to massive budget cuts, the shelter is desperately trying to keep it’s doors open.
License your pets now with no late fees thru June 30th!
or DONATE TODAY!
Your donation is tax deductible and can be made online, by mail or in person.
As one of the largest shelters in California, the Sacramento County Animal Shelter cares for more than 15,000 stray, abandoned, abused and neglected animals every year, and urgently needs your help to continue providing care and services to the animals and people of our community.
You donation makes a difference!
Sacramento County Animal Care
3829 Bradshaw Road
Sacramento, CA 95827
(916) 368-7387 (PETS)
For more information on the SOS campaign, click here.