2009 Was One of Worst Years on Record for Bankruptcies

As banks are once again making huge profits and doling out obscene bonuses - often to those who lead the economy into meltdown - Main Street is still reeling from the the economic collapse. I have a number of clients wpho never in their wildest dreams thought they would ever seek bankruptcy protection who are now doing recisely that. Typically, what puts them over the edge is the refusal of banks - the same ones that received billions of dollars in bailout funds - to work with them and allow restructuring of their debt. Still others were victims of the Wextrust and Maddoff ponzi schemes. At the same time, many law firms that do not do foreclose work or bankruptcy work are laying off attorneys and staff by the thousands. And what are President Obama and Congress doing? Basically nothing but meaningless talk. Banks that receive bailouts should be lending money, not paying the money out in bonuses. Likewise, programs aimed at restructuring residential mortgage loans need be made to work. Too often, borrowers send off requested application packages simply to have them disappear into a black hole never to be seen again. It is ridiculous. Here are some highlights from CNBC:
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U.S. consumers and businesses are filing for bankruptcy at a pace that made 2009 the seventh-worst year on record, with more than 1.4 million petitions submitted, an Associated Press tally showed Monday. The AP gathered data from the nation's 90 bankruptcy districts and found 1.43 million filings, an increase of 32 percent from 2008. There were 116,000 recorded bankruptcies in December, up 22 percent from the same month a year before.
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Arizona saw the fastest increase, a jump of 77 percent from the year before, followed by Wyoming (60 percent), Nevada (59 percent) and California (58 percent). Emile Harmon, who owns a law firm in Tempe, Ariz., said the firm has doubled its staff to handle the surge in bankruptcy filings. The lawyers have been steadily shifting away from their other areas of business, civil lawsuits and divorce cases. "Bankruptcy is kind of swallowing the whole practice." Harmon said. "There's little time to do other stuff."
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There's also no sign that things are slowing down. Harmon said bankruptcies have been coming in waves, first with those 18 months ago who had adjustable-rate mortgages, then with those who lost their jobs due to the housing downturn. Now he's finding wealthy individuals and business owners who have finally succumbed to lower incomes and shrinking home values. "A lot of the people we see were in a really good financial position two years ago," Harmon said. "People really look at you and say, 'I can't believe I'm here."'