Bk's up across the country

[treehugger1]

I spoke to a legal firm in our largest metropolitan area yesterday. I was calling in regard to finding an attorney to represent me if CA's get nasty. However, the paralegal of this "very large" firm told me that their BK cases are currently up 28 - 34% over last year. She said she thinks a "credit recession" is coming. I think she was referring to the fact that even folks with solid incomes are having trouble making their payments to secured and unsecured creditors, homes, cars, jetboats, RV's, etc. They are now "maxed out." We've depended on credit to drive this fake economy, and we probably deserve a recession. Good Lord.

[SinkingFast]

When we put our house on the market 2 years ago, it had been a BOOM market. Values going up, up, up.

We intentionally listed at $10K less than the Realtors suggested hoping for a quick sale. Dropped the price a bit about a month later. Again hoping for a quick offer.

Katrina hit. Fuel prices went up. And people backed out of buying homes. The market dried up. We were lucky to get our house sold a year later for what we owed plus costs to sell.

Now, all those folks who bought with 100% LTV, Interest Only, Adjustable Rate, 40 year mortgages a couple of years back,.......... Their chickens are coming home to roost.

[treehugger1]

It's too bad. While it can be easy for some folks to say, "people should have known better," the government (federal reserve, banking comissions, etc) did nothing to stop it. In fact, one might say the entire housing finance scenario was encouraged. I won't blame folks making decisions that appeared to be correct based on the actions of their own elected representatives. I still consider myself fortunate in that I don't have any real assets to worry about. But, I have deep concern for folks who thought they were doing the right thing. We are all somewhat products of the society we were raised in. And, it will take us, as a society, to get this under control.

[lrprn]

According to the US Courts Federal Judiciary News from late June 2007 at http://www.uscourts.gov/Press_Releas...ngs062707.html -
"Filings for the 3-month period of January 1, 2007-March 31, 2007 were the highest of any quarter in the 12-month period ending March 31, 2007, totaling 193,641. This was a 66 percent increase when compared to the 116,771 filings in the 3-month period ending March 31, 2006. In addition, filings in the 12-month period ending March 2007 were higher compared to calendar year 2006 filings that totaled 617,660."

And here's a telling graph regarding the number of consumer filings between 1980-2005 from the American Bankruptcy Institute - http://www.abiworld.org/statcharts/CDebt.pdf

I think the number of consumer bk filings is going to keep going up and up as more and more folks realize that they are swirling the drain trying paying off the immense debt load they have assumed and the lenders continue to use shark tactics to increase profits without checks and balances from Congress.

[whatamess]

We've depended on credit to drive this fake economy, and we probably deserve a recession. Good Lord.

AMEN to THAT!!! I look around now every day how people are just burning up money, wondering when its going to blow up in everyones faces.
I can say now, even if we were living well off the hog now I have NO desire to "Keep up with the Joneses"/above my means. I hope to keep living below means no matter what. To be honest, people scare me when they buy luxory items.
We just had thousands of unexpected damage done to my mothers last week due to winds. One never knows when the glass house will fall.

WAM

[treehugger1]

I just finished reading some articles on "formal" (what most folks on tihs forum have done) bankruptcy versus "informal bankruptcy (that's where I am.) It is interesting that not only are BK's up across the country, but the number of litigation in terms of lawsuits over debts and judgments is growing rapidly. I think we will see some legislation inacted in the next decade (Congress moves slowly) that looks to offer further (better?) relief for debtors. One thing is for certain, there will be no legislation that creates "debor's prison," as most states can barely afford to imprison violent criminals, LOL. While I take some responsibility for my actions, I share some of the responsibility with those who had no problem extending me lines of credit when clearly they could see I was a high, high, high risk.

[Run]

The really scary thing is that the resets are just now starting to hit home, and the delay in reporting means that the numbers will skyrocket! If you look at the ARM reset graphs, the really painful jumps have yet to hit home. No one will be able or willing to keep up with them. (the markets know it and are reacting in advance)

I agree with the freedom of having nothing. Everybody talks about the "simple life," but no one chooses it. It really is the way to go. Happiness comes cheap after all!

[desperation]

I couldn't agree more. Before and since going BK, the creditors always seemed to want MORE MONEY. This came by way of jacking interest rates on top of late penaties
Universal default...even if I paid just 20 minutes late on one of my cards.

One card I had held for 7 years which started out at 8% interest (for life! so they claimed) jacked me to 23% because of UD...then when I missed one payment after having paid on time for all those years sent me a bill doubling my monthly payment, and letting me know that they were increasing my interest to 35%.

I checked into credit counseling after this happened, complete waste of time for me)...and most of the creditors wanted anywhere from 11% to 18% still in interest payments. There was no way I could make it work. Half of my income going out to them...the remaining going towards utilities and food with absolutely nothing left to save or put back for emergency sitiuation. Credit counseling (and I talked with several) said we can get you in and out of our program in 5 years.

5 years of enslavement is what I thought. Towards the last before I went BK...paying the CC's dictated that I was paying out half of my salary to the CC's and with nothing left after. At that point I would use the CC's to make up the difference....therefore never...ever getting ahead on the principle. So often times when the paycheck came up short I would use the CC to put gas in the car, or food on the table.

I think we have become a debtor nation. Guess we all want latest gadget, device, etc.


It is time to get simple again. There are no luggage racks on a hearse.

[treehugger1]

Amusing about no luggage racks on a hearse. What I've been reading is that the folks who used to choose "informal" bankruptcy (can't pay your bills, so stop paying them and deal with whatever) have historically been very low wage earners who moved from place to place, changed jobs many times, etc. Informal bankruptcy now seems to be associated with higher wage-earners such as myself. Studies based on the numbers of judgment debtors based on the low percentage of judgment debtors filing BK, suggest that not everyone can afford or are willing to file. One of the questions folks may be asking in the future is, "Do I really need this much credit?" I hope that's what they will be asking.

[BKOnce]

In summary, spending money costs money, and... spending life ... also consumes LIFE...

[HenriettaHen]

Their chickens are coming home to roost.

Hey, I resent that!

The huge increase in filings might also be a delayed reaction to the law change in late 2005. I know it set me back, because I was just realizing my situation at that time. I had to wait out the next year while the dust settled, and I'm sure glad I did. I received all kinds of conflicting stories from lawyers during that year, while they themselves were coming up to speed with things. The prices they were charging went up accordingly, too - I was quoted in the range of 2500 - 4500 ... for what really turned out to be the simplest of Chap 7 no assets!

That was a very bad year. But then I found BK forum, and things got better.

[Granny]

Amusing about no luggage racks on a hearse. What I've been reading is that the folks who used to choose "informal" bankruptcy (can't pay your bills, so stop paying them and deal with whatever) have historically been very low wage earners who moved from place to place, changed jobs many times, etc. Informal bankruptcy now seems to be associated with higher wage-earners such as myself.

That's the route we have taken for my hubby, the informal route. This is easier to do in a state with no wage garnishments and where judgments mean nothing. With all the changes in our life, giving up the business, my filing Ch 13 and having to make payments to the trustee, we have quit paying his CC's, at least some of them. The trustee won't allow us to make payments on his cards, so we are paying one and letting the higher balance one go to collections. He's not taking the formal route so that if we ever need it, it can be "our ace in the hole". Sure, we will get a 1099 for it, but the taxes due for the 1099 would be less than the attorney's fee and trustee's fee for another Ch 13. Technically, I am a low income filer (slightly less than the state median), but we don't consider ourselves low income filers, we just have a full house--two grandkids and 1 boomerrang kid.

[treehugger1]

I wouldn't be all that concerned about a 1099 unless the debt is "forgiven." It is my understanding that a "charge-off" generally goes to a debt collector. In such a case the debt is still valid. You have no economic benefit. Check with a CPA or attorney to verify this.