Bankruptcy and the US Economy

Where's the US economy going? Beliefs cover anything from doomsday predictions to cautious expectations. Yet, even as an election year approaches and information "spin" starts to increase from news agencies, it's clear that the economy continues to be not doing well.

Surprisingly, bankruptcies are lowering nationwide. Signaling what could be a nationwide trend, the U.S. Bankruptcy Court for the Western District of New York reported a 17.5 percent drop in bankruptcy filings in Buffalo and Rochester. While the numbers for Manhattan and Suffolk counties haven't been reported yet, the National Bankruptcy Research Center and American Banking institute reports a nationwide drop nearing 8 percent during the first half of 2011.

What exactly does all this mean? Is the economy really getting better? Should we be hopeful? If the credit crunch and nationwide debt are taking such a toll nationwide, why aren't bankruptcies skyrocketing?

The typical opinion, however, is that recent downward trends in bankruptcy aren't a signal of a developing economy. Foreclosures in the US have bogged down to a crawl: new regulations intended to curtail foreclosure-happy banks have terrified lenders. Many citizens that choose bankruptcy do so to protect a home. In addition, there's an overall decline in credit creation: because the economy's in such bad shape, Americans want to spend less money. Finally, the price of going bankrupt is prohibitive, forcing most Americans to find other means to live financially.

Even the Federal Government is getting in on the fact that a large number of banks violated the law during the homeowner credit crisis. As the government rose to defend the rights of homeowners, regulations were established to protect them: and they worked. Banks are actually not only terrified to lend, they're terrified to foreclose. It's become an unfortunate catch-22 for those who want to purchase property. In addition, the situation has lowered foreclosures, and lowered the desire for Americans to file for for bankruptcy to protect their home.

Americans are spending less. Overall, consumers have wised up, and are weathering the recession by not spending as much. Fewer homes, fewer boats, fewer cars, fewer motorcycles, fewer flat-screen TVs--fewer overall big-ticket credit items are being bought nationwide. Due to this fact, Americans have less in the way of assets to protect, making Chapter 7 a less inviting answer for financial debt problems.

The government has made it harder to file for bankruptcy. The means test is a difficult task to accomplish without a lawyer. However, it's not impossible. If you need to find out more about declaring bankruptcy, realize that it is possible with the help of a specialized lawyer.