While personal bankruptcy filings continue to decrease somewhat nationwide‚ the news out of Los Angeles and surrounding areas may not be so rosy.
California has the dubious honor of having one of the highest unemployment rates in the country. Add to that rising food costs‚ increasing bank fees and high interest rates from credit card companies‚ and what you find are many Los Angeles-area residents looking for a way out of mounting debt.
Los Angeles bankruptcy may be that option. As Los Angeles bankruptcy lawyers have seen‚ people are hurting and they’re looking for answers. If they have unpaid bills and are paying high interest rates and minimum payments‚ things are bad.
Bankruptcy can make things better. Through this complex process‚ an attorney can help you avoid creditors‚ wage garnishment‚ and harassing phone calls from lenders that may have become a routine part of your day. With the debt wiped off your slate‚ you can focus on starting over.
According to The Wall Street Journal bankruptcy filings in September continued a slow decline. The drop was 17 percent compared to September 2010. Yet‚ 108‚517 people filed for bankruptcy in September — still a very large number.
More than 1.5 million people filed for bankruptcy in 2010‚ the highest level since 2005‚ which is when lawmakers made filing more difficult. With the country lacking in its ability to recover and people struggling to hang on to their jobs‚ the impact of declining bankruptcy filings are unclear.
The changes made by lawmakers attempt to steer consumers to Chapter 13 bankruptcy in Los Angeles‚ where debtors pay back a portion of their debt while still having a majority of the debt cleared. In Chapter 13‚ a consumer sets up a payment plan‚ usually over three to five years‚ to pay back some of their debt.
But despite the legislative intent of the 2005 changes‚ only about 30 percent of bankruptcy filers chose Chapter 13 last month. A majority are still filing Chapter 7 bankruptcy‚ which clears out a person’s debt without them having to pay anything back. In some cases‚ a person must forfeit assets‚ if they have any.
To compare 2011 and 2010 numbers may not be apples to oranges‚ however. In 2010‚ the crushing blow of the economic situation was in full force‚ while people have had more time in 2011 to assess their situation and make a choice as to whether bankruptcy fits their needs.
What the article also doesn’t point out is that in 2010‚ credit card companies and banks were far stingier with loans and credit. Now‚ they are again begging for consumers to sign up for their cards. You’ve probably seen more and more TV commercials for credit card companies pitching their products.
What this signals is that consumers‚ who would normally file for bankruptcy‚ may be getting high-interest credit cards as a last resort instead of filing for bankruptcy. But what they aren’t considering is that it’s just going to add to the problem.
Credit cards aren’t a lifeline. In fact‚ they are more detrimental to a person’s finances than bankruptcy. Bankruptcy loosens the chains and allows people financial freedom they have sorely lacked. But credit card companies lock you up and throw away the key.
Their high interest rates and fees that kick in when payments are missed keep people stuck in the bubble of debt forever. It’s a harsh cycle that only bankruptcy or an influx of cash can stop.
Cal West Law will provide a free consultation to help guide you in making a decision that works for you. In Encino‚ Glendale‚ and Los Angeles‚ just call (800) 568-0707.
Personal Bankruptcies Decline‚ by Sara Murray‚ The Wall Street Journal