Bankruptcy Filings Drop But That Does Not Mean The Economy is Improving
The Atlanta Journal Constitution has recently reported that bankruptcy filings have dropped by eight percent this year but that does not mean that the economy is improving. You would think that with the stock market dropping and unemployment on the rise that bankruptcy filings would be climbing but not in this awful economy. It is so bad that many people can’t even afford to file bankruptcy. As a result, filings are dropping.
The article reports that there is currently little pressure from creditors to file bankruptcy. The article suggests that once the economy turns around, creditors will resume pressuring Georgia consumers for payment and the number of filings will increase.
As a Georgia bankruptcy attorney, I agree that many creditors are holding off on filing lawsuits against some Georgia debtors because they are unemployed. However, one factor that the article did not mention was that last year, Georgia dramatically increased the filing fee for creditors to file lawsuits. When the price of something goes up, the demand will usually come down.
I suspect that many creditors are holding off filing collection lawsuits in Georgia until the economy improves. As a consequence, there will be many Georgia debtors who will wish that they had filed Chapter 7 when they were unemployed.
When someone has been unemployed for the past six months, there is almost zero chance that they will flunk the bankruptcy median income test. In contrast, once they go back to work and get six months of solid income under their belts, some potential Georgia bankruptcy filers will be disappointed to discover that they now no longer qualify to file Chapter 7 but must instead file a Chapter 13 and pay back their creditors.
I realize that for many people, filing a bankruptcy is something they are desperately trying to avoid. However, many people need to clear the decks now so that they will be able to get a fresh start once they return to work. For some people, waiting too long to file might make getting that new start a lot tougher.
Why not take advantage of a free consultation with a Georgia bankruptcy attorney and allow them to review your entire situation?