According to data collected from the nation’s 90 bankruptcy districts, filings increased 32% nationwide from 2008 to 2009. In Central Florida, filings increased 58% from 2008, and 188% from 2007.

Compared to the rest of the country, Florida has the 12th largest increase of 44%. Arizona experienced the fastest increase of 77%, followed by Wyoming with 60%, Nevada with 59%, and California with 58%.

Florida workers are waiting to see what’s going to happen once the space shuttle stops flying next year, which will leave 7,000 space industry employees jobless. "It's very, very sad to see people in this situation," said Merritt Island bankruptcy attorney Carole Bess.

Bess thinks the problem is getting worse faster and we will be experiencing a new wave of businesses closing. A downward spiral occurs as businesses increasingly close because the number of unemployed rises, which potentially leads to even more bankruptcies.

Experts believe some of the increase is because of a natural recovery as consumers and attorneys become used to the recent overhaul of bankruptcy laws.

According to John Pottow, a bankruptcy professor at the University of Michigan, the return of the high number of filings show the failure of the 2005 overhaul bill, which made filings more costly and time-consuming as consumers had to go through exhaustive paperwork to determine eligibility for Chapter 7 bankruptcy and added liability for attorneys who provided assistance.

"It never made sense in the first place that you could change the laws and make all these bankruptcies go away,” said Pottow, who would like the 2005 law changes repealed. “If people are encountering financial distress, you can only scare them away for so long before they come back again.”

Leading credit card lenders like Bank of America, Citigroup and Chase have incurred larger than normal losses due to increasing consumer defaults.

What does this mean to you?  If you are like many struggling Tennesseans, credit card lines of credit serve as a key source of consumer liquidity.  If your credit line is cut from $20,000 to $10,000 your emergency safety line will be that much smaller.   Do not be surprised to see your credit line reduced to a level below your current balance, meaning that you will being seeing overlimit fees not because you exceeded your limit, but because the credit card lender reduced that limit.

Consumer advocates recommend that you should avoid accessing more than 30 to 40% of your available credit line.  If you find yourself servicing larger balances than this, now is the time to start chipping away at those balances.

We also expect to see more bankruptcy filers who are forced into Chapter 7 or Chapter 13 because their credit card lenders will be taking an extremely hard line on overlimit fees and penalty interest rates.   Although we are a bankruptcy firm, we encourage all of neighbors not to let these hardline credit card industry policies drive you into bankruptcy.

Last year the New York Times ran a story called "Bilking the Elderly, With a Corporate Twist."  The story documents the process of how mailing list vendors compile detailed information about seniors using telemarketing phone scripts, and how these lists are sold to unscrupulous companies who rip off elderly victims by selling useless products and services. 

One company, InfoUSA Info advertised lists of “Elderly Opportunity Seekers,” consisting of 3.3 million older people “looking for ways to make money,” and “Suffering Seniors,” 4.7 million people with cancer or Alzheimer’s disease. “Oldies but Goodies” contained 500,000 gamblers over 55 years old, for 8.5 cents apiece. One list said: “These people are gullible. They want to believe that their luck can change.”

Often bankruptcy can eliminate the debt that arises from these scams, but not before a senior loses his life savings or puts his home at risk.  If you are a senior or if you are a family member of a senior:

• put your name on the national no-call directory
• avoid revealing personal information if you enter sweepstakes as many sweepstakes are designed to collect personal information that will be sold to telemaketers
• create a "disposable" email address with Yahoo or Hotmail for use in any online form
• never reveal bank or credit card information to an unknown caller
• don't be afraid to hang up if you feel uncomfortable

1. Bad luck – unexpected illnesses, accidents, crime, unexpected job loss
2. Lack of preparation – lack of emergency funds, insufficient insurance, poor estate planning
3. Bad Financial Decisions – divorce, bad investments, gambling, falling for something that sounds too good to be true

Here at Clark and Washington, we probably see more bankruptcies resulting from medical problems and related bills than from any other cause.  Our #2 reason would be bad decisions – such as buying too much house or a too-expensive car.

Of course some bad decisions are worse than others.  Take, for example the case of Tony Alleyne in England.  Tony is an interior designer and he came up with the idea of creating a house  who came up with the idea of decorating the interior of his house as an exact replica of the Starship Enterprise from Star Trek – The Next Generation.  Tony believed that fellow Trekkies would rush to hire his firm to redecorate their houses in a Star Trek motif.

After going through several hundred thousand dollars (and 1 wife), Tony discovered that this Trekkie market did not exist and that he had spent almost 10 years pursuing a business plan that had no chance for success.

If you have any thoughts about what causes bankruptcy, we'd love to hear from you.  If you want to replace your refrigerator with a "warp coil" let us know as well – we can set you up!

In difficult economic times, cash strapped families sometimes come to the realization that they simply cannot afford a car or truck payment.   As difficult as it may be to get to work or to shuttle the kids around town with one car, getting rid of that second car or truck payment may seem like a good idea, especially if that second vehicle is a gas guzzling SUV or truck.

Unfortunately, in most cases, you may need to think twice about surrendering your car or truck back to the bank or finance company.  As the Tribune points out. surrendered vehicles are disposed of at an auto auction, where they often bring no more than half of "retail" value.  If your loan was a four or five year note, or if the interest rate was high, or if you paid little or nothing down, there is a good chance that you will be "upside down" with your loan.

Lenders will apply the auction sale price to the outstanding balance, then sue you for the balance under the contract.  As the Tribune article correctly points out, surrendering your vehicle does not cancel your contractual obligation or the accrual of interest.  Imagine the shock of discovering that you still owe $10,000 for a vehicle that you surrendered two months ago, and now you are facing a lawsuit and the threat of a judgment that can result in a wage garnishment.

Deficiency judgments are often the last straw for individuals trying to deal with debt, and we often see deficiency judgments in our office.  Bankruptcy is one tool to eliminate or greatly reduce your deficiency obligation.  Since bankruptcy empowers you to cancel contracts, it may be a financial tool to consider if you are struggling to pay a car or truck note that you cannot afford.