According to a report released by the Administrative Office of the U.S. Courts, bankruptcy filings rose 30% in 2008. An additional 241,724 bankruptcy filings were received by the court as of September 2008. From Oct. 1, 2007 to Sept. 30, 2008 over 1 million bankruptcies were filed in the United States. That’s a dramatic increase in personal bankruptcies which clearly reflect the very real economic challenges faced by ordinary citizens who are finding it impossible to remain afloat financially. Many of these bankruptcy filers are facing major financial hardships for the first time in their lives as the rug is being pulled out from under even the most financially responsibly families. They didn’t file bankruptcy because they wanted to get away with not paying their debts; they simply took an honest assessment of their financial position and the current economy and made a wise decision to cut their losses before it’s too late.
There is another dynamic taking place that we don’t hear about in the news, many creditors are becoming more aggressive as they experience record defaults on both secured and unsecured debts. These aggressive collection practices are forcing many debtors to file bankruptcy who under ordinary circumstances would try to wait until their financial circumstances changed in the hopes that they could eventually repay their debts. With all of these factors in play, bankruptcy filings are set to increase even more and even faster as debtors try to save what little assets they have remaining.