Georgia bankruptcies increase while number drops nationally

From May to June of this year bankruptcy filings in Georgia rose by 13 percent. Nationwide the rate of bankruptcy filings actually dropped by more than six percent over the same time period. Of course regional economic factors will always play a role in the number of bankruptcy filings for any given states. Some states saw increases as much as 30 percent.

In the short term, rising and falling dates of bankruptcy filings may not say as much about the health and growth of the overall economy as it may at first appear. While the overall health of the economy certainly has an effect on long term trends in bankruptcy filings, other factors, such as the availability of credit, are larger factors in the month to month fluctuations in the numbers of bankruptcy filings.

Bankruptcy rates have been increasing for the last several years during the economic downturn and early stages of the recovery. The decrease in nationwide numbers is likely the result of a loosening of standards for consumer credit. When are able to borrow more from credit cards and other sources, they may be able to hold off on bankruptcy a bit longer.

Unfortunately for many this is a short term solution to what can be a longer term problem. After maxing out this additional credit some consumers find themselves with no real improvement in their ability to repay their debts, but now have additional bills. Additional borrowing on high interest credit lines may contradict the accepted wisdom that the first step to getting out of a hole is to stop digging.

While the thought of bankruptcy may be unsettling at first, the reason that it exists is to give people a fresh start when they are unable to repair their debts. It provides an orderly process to stop the collection calls and satisfy creditors.

Source: New York Times “Fewer Americans File for Bankruptcy” TARA SIEGEL BERNARD, July 6, 2011