A dip in bankruptcy filings in the second quarter of the year had some believing our wallowing economy was finally crawling out of the mud. However, an August report by the Administrative Office of the U.S. Courts indicated bankruptcy filings are still increasing, albeit at a slower pace.
Filings rose by eight percent nationally between 2009 and 2010, a considerably slower rise from prior years' filings, which had been increasing by an average of 30 percent since 2006.
Tennessee filings are down by comparison, dropping approximately three and a half percent during the same time period.
When to File Bankruptcy in Nashville
There are several factors that influence the number of bankruptcy filings. A review of those factors may be helpful when trying to determine the best time to contact a Nashville bankruptcy lawyer.
Foreclosure
Foreclosure has become a fixture in the American psyche since the mortgage bubble burst in 2008. Since that time a saturated home market coupled with a weak economy have damaged property values creating a large pool of homeowners owing more on their houses than what they are worth.
While foreclosures have slowed over the past year due to the robo-signing scandal and a large inventory of vacant homes already on the market, the housing market is not expected to recover within the next few years. The backlog of delinquent homes pending foreclosure is likely to keep the real estate market floundering and property values stagnant. The dismal housing forecast could give homeowners trapped in underwater mortgages the reason they need to finally jump ship.
Access to Credit - Outstanding Consumer Debt
More than any other factor, experts believe access to credit may be the most significant determinant of whether people file for bankruptcy. Few people intend to file for bankruptcy and most will do not do so as long as they have access to continuing credit. When creditors stop lending and extending credit, families are frequently forced to file.
With the protracted economic slump, credit cards are being used to buy necessities such as food, gas and groceries to tide families over. Eventually credit runs out or the payments become unsustainable and families are forced into bankruptcy.
Unemployment
Ironically, many people do not file bankruptcy while they are unemployed. This is mainly because it costs money to file a bankruptcy in both attorneys' and filing fees. Frequently families initiate bankruptcy proceedings once someone has returned to work who can pay for the bankruptcy fees.
Lawsuits - Judgments and Garnishments
Sometimes the creditors themselves are the ones that make it impossible to delay a bankruptcy filing any further. Unpaid creditors will eventually initiate a lawsuit to recover the money that is owed. When levies or other garnishments threaten a family's survival, they may be forced to filing bankruptcy sooner than they would have liked.
Stress
Financial stress is the leading cause of divorce in America. Even if a marriage is strong, the persistent nagging of creditors can lead to insomnia and a weakened immune system.
Time Limits Between Bankruptcy Filings
When you can file bankruptcy may be determined for you. There are restrictions governing how often you can file bankruptcy. If you have filed for a Chapter 7 bankruptcy in the past, you will not be able to discharge your new debts unless eight years have elapsed between bankruptcy filings. If you filed a Chapter 13 bankruptcy, you must wait six years before filing a Chapter 7 bankruptcy petition.
Balancing the Factors
The factors listed are just a portion of the considerations that should be examined when weighing bankruptcy options. There may be additional factors depending on the individuals involved. Reviewing an individual situation with a Nashville bankruptcy lawyer can be useful for sorting out the most relevant factors influencing a bankruptcy filing.
Just as no two bankruptcies are alike, there is no set answer as to when the best time to file for bankruptcy. The ideal time to file bankruptcy will vary for each individual. If you are overwhelmed with debt and are considering bankruptcy, you should speak with a local bankruptcy attorney who can review your options with you.
