The world is going bankrupt

By the end of the first decade of the new millennium bankruptcy cases will have reached tens of millions in the US alone. More people will have filed bankruptcy than have acquired a college degree, retired, or have died of cancer. Current bankruptcy statistics show that businesses, banks and insurance companies are going bankrupt as well as individuals.

Banks and mortgage companies are going bankrupt because of the mortgage crisis that’s been sweeping the country for the last couple of years, while other companies and business are suffering the economic change due to lack of consumer confidence, where people are mostly willing to hold on to what they have rather than continue spending on non-essential items.

Other reasons that contribute to the high number of bankruptcy filings, including loss of employment for a great number of individuals, medical bills, credit card debt, becoming disabled, loss of a primary income provider and of course identity theft, which is becoming less rare. Is spite of the changes implemented in bankruptcy law in October of 2005, making it more difficult for individuals to qualify and discharge their debts through bankruptcy, the number of bankruptcy filings seem to have kept up the pace.

Bankruptcy alternatives become less feasible

Although bankruptcy alternatives have always been encouraged, the current bankruptcy trends provide proof that it has become less effective for individual filers to properly rely on bankruptcy alternatives such as debt consolidation, credit counseling or negotiating directly with their creditors.

The pressure that creditors put on debtors only adds to their inclination to end it all by going with the one option that can and that is by “filing bankruptcy”. Even after making the decision of filing bankruptcy, individuals become weary of the fact that bankruptcy is a decision that will impact their lives severely in terms of credit worthiness.

The most common alternative to bankruptcy is usually debt consolidation, however this often results in an even larger problem for the debtor as these types of programs often carry high fees for the service. Also there are a lot of companies that often pose as non-profit companies helping people to get rid of their debt through debt consolidation but in fact have a number of hidden fees and leave the debtor with even more debt.

Realistically the best option today for someone who’s heavily burdened by consumer debt and have little or no income, is bankruptcy chapter 7 in which all unsecured debts can virutally be wiped out. For consumers who have assets they want to hold on to and have predictable and stable income, the best option is bankruptcy chapter 13 where their debts can be restructured for easier more manageable payments.

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