As 2010 reaches its end, it’s worth taking a quick look at the current state of bankruptcy. Specifically, two trends in particular.
Trend #1: Business bankruptcies are decreasing.
Trend #2: Consumer bankruptcies continue to increase.
This is according to an article in the Daily Finance that notes that business bankruptcies have declined for the 5th quarter in a row, and they’re down significantly from the 3rd quarter in 2009. The same article notes that non-business bankruptcies (i.e., consumer bankruptcies) have risen 12% from a year earlier to 1.054 million and that bankruptcy filings are up 6.7% in the third quarter.
Does this mean the economy is getting better or worse? Is it more likely or less likely that you will have to file for bankruptcy in 2011?
Well the consumer bankruptcy numbers clearly are not a positive economic indicator. They seem to reflect the close to 10% unemployment rate that has been resisting downward movement in the U.S. But what about the business bankruptcy decline? Surely that must be good news.
Not necessarily. The reduction of business bankruptcies may be more a reflection of the costs of bankruptcy. It’s become so expensive for a large company to reorganize through bankruptcy that many try to find ways outside the bankruptcy process. Additionally, the high-yield market has been able to produce enough credit to enable large companies to limp along while trying to sort out their problems.
Still, the fact that so many people and companies have gone through bankruptcy should mean that financial problems are getting sorted out, though perhaps not as quickly as we’d like. But over time the effects and benefits may start to appear as our country and our economy slowly adjust.
The article also predicts that a number of community banks may end up insolvent since many of them are tied up with the real estate mess and are holding properties that are worth less than what was paid for them. (It’s not just homeowners who find themselves underwater.) And it mentions several industry sectors that will likely face significant restructuring challenges:
- Movie rental companies
- Media (especially print media)
- Grocery store chains – Too much competition from high-end grocers such as Whole Foods and big box stores such as Walmart.
If you’ve made it through 2010 relatively unscathed, then congratulations. We’re not done with the tough times yet, though, so hang in there.
And if you have questions about business or personal bankruptcy as well as concerns about debt or foreclosure, please of course feel free to get in touch for a free initial consultation.
Contact Bruce Weiner, Esq.
EMAIL Bruce Weiner
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(718) 855-6840 (Local)
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Go to bankruptcy Lawyer Brooklyn NY to learn more about Rosenberg Musso & Weiner LLP and/or to set up a free consultation.
