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“Peak” bankruptcy?

by Lance Heisler

Most of us know that the economic picture over the last four years (at least) has been marked by more clouds than sunshine.  Even if you don’t follow the news,  you can attest to first-hand experience  regarding the state of this difficult economy if you have lost your home to foreclosure;  lost your job and have been unable to find a new one; you have seen your income decrease; or you have paid more to fuel your car or feed your family than ever before.

It will come as no surprise that there has been a huge spike in bankruptcies filed since 2008.  The worst period was between 2008 and 2009, when bankruptcy filings in the US increased by a whopping 35%.  And lest you think that our state was less impacted by this trend, Minnesota experienced a 32% increase in bankruptcy filings during that same time period.  

The good news is that  there is reason for cautious optimism as we look ahead.  In 2011, the number of bankruptcy filings for both personal and business bankruptcies began to decline.  This was true both nationwide and in Minnesota.  Nationwide, both business and personal bankruptcy filings were down 14% from January through the end of September 2012, as compared with the same time period one year ago, according to  Epiq Systems, which compiles data for the American Bankruptcy Institute.  In Minnesota,  bankruptcy  filings  are  down 11.5%  thus far in 2012.

Explanations that have been offered include that small business owners are working harder to bring their debts, assets, and cash flows  into better alignment, which in turn puts them in a better position to obtain needed financing.  Some of the decrease in personal bankruptcy filings may be attributable to record low interest rates.

However,  careful planning  and  meticulous budgeting remain the key watchwords, as  unemployment and fuel prices remain high, and overall household debt remains about the same as it was  in 2005, according to the U.S. Department of Commerce.

Don’t hesitate to get professional help and guidance as you navigate these uncertain financial waters. I would be happy to speak with you about your situation and answer any questions you may have.  Contact us to schedule a free confidential appointment.


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