Bankruptcy Filings Hit Record Levels

Personal bankruptcies hit a record high last year in Central Florida, and this year's total may be even larger. Rising bankruptcy levels are an indication of the continued personal hardships families and small businesses are facing during the recession.

The United States Bankruptcy Court in Orlando tallied 20,305 bankruptcies last year, reflecting an increase of nearly 60 percent over the total number of bankruptcies in 2008. This is a significant increase over the previous record number of bankruptcies set in 2005, when individuals rushed to declare bankruptcy before new, more stringent, federal bankruptcy laws took effect that year.

Bankruptcy filings were also up nationwide in 2009, albeit less dramatically than in Central Florida. Nearly 1.5 million Americans filed for personal bankruptcy, 32 percent more filings than in 2008. However, the national total remains far below the record number of filings in 2005, according to the American Bankruptcy Institute and National Bankruptcy Research Center. Economists say bankruptcy filings spiked in 2009 because of mounting job losses, failed businesses and the continued slump in housing prices which have hit Central Florida particularly hard.

Bankruptcy, while a tough way to deal with debts is one of only a few options available to those experiencing devastating financial situations. The 2005 changes made it more difficult, but not impossible, for individuals to file for Chapter 7 "fresh start" bankruptcies. The alternative, Chapter 13 bankruptcy, is now more common as it allows for the repayment of a portion of debt over a period of time free of late fees and other charges. Chapter 13 also has provisions that can save homes that are upside-down or behind in their mortgages and Chapter 13 can even protect some assets.

Overwhelming debt can deplete savings accounts, retirement funds and devastate families. Partly because of debt and home forfeitures, one in eight Americans between the ages of 25 and 34 is living with his or her parents again. In other cases, parents who can no longer afford their own homes are moving in with their children. Sometimes, filing for bankruptcy can provide a solution that will extend or restore independence.

If You are Experiencing Debt Issues, Contact an Attorney

Bankruptcy is still an option for many people suffering from debt. Each individual's financial situation is unique. A lawyer can help you explore your options to determine whether or not bankruptcy or another course of action is proper for you.