What will happen in the bankruptcy world for 2013? My predictions are not based on any scientific data but instead are based on my gut along with personal experiences. I don’t have a crystal ball but here is my stab at it.
1. Bankruptcy Filings will drop by another 30 percent
I have been hearing stories about how bankruptcy clerks have been laying off staff by as much as 25 percent because of the slowdown in filings. A few large bankruptcy filers in Georgia have either shut down or split apart recently. Does this slowdown in bankruptcy filings mean that the economy is getting better? I think not.
I suspect that the reason we are seeing filings drop is because we are running out of people and not because of a better economy.
Once of the consequences of the economic meltdown that occurred all across our nation four years ago is the tightening of credit. Five years ago, it seemed like every person who came into my office had over $30,000.00 in credit card debt. Back then, I think my dog received a credit card application. In contrast, banks today are stingy about approving new credit cards. While I still see people with credit card debt today, it is nothing like it was five years ago.
In addition, many people who have wanted to buy a house today are not able to do so because of the tight credit policies. Five years ago, getting a house with zero down was not uncommon. Now, I don’t think we will ever see zero down again. I think the tight credit policies will drastically reduce future filers.
2. Total Foreclosures will Drop by another 25 percent.
However, I have noticed that mortgage companies are getting more aggressive in their foreclosures. In the past two years, I’ve seen a lot of cases where the mortgage company would let a person get one full year behind before they started foreclosure proceedings. During this past week in my Rome office, I’ve meet with three clients facing foreclosure who are only four months behind. Does this mean that the real estate market is getting better since banks are foreclosing faster? Since total foreclosure numbers are decreasing, perhaps the glut of foreclosures has ended. Local real estate agents in Northwest Georgia have told me that sales are increasing.
3. The unemployment rate will remain the same as 2012
Another reason I don’t see believe that the economy is getting better is because the unemployment rate is not going down. As I look at hundreds of paychecks every month, I’m not seeing people get overtime like they did four years ago. When I see increased overtime, that means to me that employers are about to hire more people because business is expanding.
I just don’t see the economy rebounding anytime soon. Many local businesses are scared to death of how the new national healthcare system will affect their bottom line. Many business owners are not sure about how much hiring a new employee will cost them.
Hopefully, our country will get out of this economic mess soon.