In March of 2010, it was recorded that 6900 bankruptcies were being filed on a daily basis. Yes, you read that correctly. Nearly 7,000 people per day were filing for bankruptcy in the United States. Sadly, there has been nothing in the current economic climate that would indicate that the number of bankruptcy filings has declined. As any bankruptcy attorney will note, more and more people are seeking bankruptcy protection.
This leads to a very obvious question: Why is it that bankruptcies have hit record highs over the past few years? It is really not much of a secret as to the reason why. The truth of the matter is that the weak economy has been the driving factor behind the great expansion of bankruptcy filings.
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On the most basic of levels, when the economy is weak, people are not able to make very much in terms of their income. Actually, a decline in one's income can be the least of one's worries as there can be even further problems which can derive from a weak economy.
Consider the following scenarios:
- Imagine being in a well paying job for several years only to be released. Now, you can do little more than collect unemployment compensation which may be in the neighborhood of 1/3 of your previous earnings.
- You could own a small business that sees a massive decline in revenue which leads to a 75% decline in income.
- A small business could see an even greater decline in income that causes the business to run at a $2,000 a month loss. That is -$24,000 per year and likely would lead to the business closing down.
Remember, when your income is down to a very low level, you will end up needing to go in debt to cover your living expenses which could be enormous. For example, someone suffering from a decline in income could end up falling behind on mortgage payments, pile up credit card debt, or be unable to cover medical expenses. This is to say nothing of not being able to pay state and federal taxes.
The weak economy also makes it extremely difficult for you to be able to generate the revenues needed to get out of such a bad financial bind. The truth of the matter is that a bad economy creates all manner of ripple effects that prevent the ability for someone having a difficult time staying on top of his/her finances to actually be able to do so. At some point, debt piles up to such a high degree that visiting a local bankruptcy attorney might be the only way out of such a tough scenario.
Difficult economies come with a sense of mystery. That is to say, you never can tell when they are able to be reversed. Because of this, it is extremely difficult to navigate out of a bad economy. Those unable to effectively deal with their debts due to the unfortunate issue of the impact of the economy may wish to look towards filing bankruptcy. This may prove to be the only beneficial means of dealing with a tough financial situation.
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