Rising foreclosures rates is not news, nor is the high unemployment crippling many state economies. What is news is the highs we are hitting in terms of bankruptcy.
Some of the statistics are quite surprising. New York, for example, has some of the lowest foreclosure rates in the country, at 1 in 2,000 homes for July 2010 when some states were at 1 in 200 to 1 in 400 homes going into foreclosure. California has been hit hard by the housing crisis, with more foreclosures than any other state in July, thought it is the largest state. What is more important is the statistics: 1 in 200 California homes went into foreclosure in July.
Unemployment across the country is high too. Unemployment has gone up so far from 2009 to 2010, though only by a few tenths of a percent. Still, almost 10% of Americans are unemployed. This number is causing more bankruptcies.
Foreclosures have increased over 20% from 2009 to 2010 according to some estimates. Foreclosures are being blamed on more than unemployment, as tight credit standards and lost medical coverage is also affecting many Americans.
For some fair reasons bankruptcies get a bad name. However, to stop foreclosure and to discharge debts, there are few better solutions than filing bankruptcy. When used correctly, Chapter 7 bankruptcy can save you tens of thousands in debt. When used correctly, a Chapter 13 bankruptcy can stop a foreclosure. If home owners who recently became unemployed filed for Chapter 13 bankruptcy before foreclosure papers had been filed they could save their homes.
Over 1 million people took advantage of bankruptcy in 2009, and we are on track to get even more in 2010.
Chapter 7 bankruptcy has some affects on foreclosure too, especially when you are unemployed. For some, the debt repayment plan in Chapter 13 may not be affordable. But Chapter 7 discharges most all credit and medical debts, the main problems for many, and can also discharge mortgage debt (though you will likely lose the home in this case).
Are things getting better before they get worse? Foreclosures and unemployment are big problems. Bankruptcy is not a solution for everyone.
In order to slow foreclosures, bankruptcy is an option. In order to create more jobs, we need more businesses, especially small businesses, to start and expand. The good news is that we still do have options for financial protection. There is no better time to save your retirement money and 401Ks rather than spend it. There is no better time to start a business or buy a home for a good price.
Job growth is not enough just yet, but using what the financial system gives consumers – by filing for bankruptcy or at least consulting with financial help – should not be overlooked.