Bankruptcy rates may increase as economy improves, some say
Fewer people filed for bankruptcy in West Virginia in 2013 than the year before, according to a recent report by the American Bankruptcy Institute. Nationwide, bankruptcy filings were also in decline, dropping by a total of about 13 percent across the country. However, while it may seem counterintuitive, some experts predict that the downward trend in bankruptcy rates could actually reverse itself in 2014 as the nation continues its recovery from the Great Recession.
In West Virginia and throughout the U.S., bankruptcy rates spiked in the immediate aftermath of the 2008 financial crisis, and have been gradually declining ever since. Now that the economy is improving and more people are going back to work after being unemployed, some bankruptcy lawyers say that the U.S. bankruptcy rate may start to rise again. In part, they say, this is because people often feel they have more to lose once they are working again – for instance through wage garnishment – and thus are more likely to take steps to eliminate their debts through bankruptcy or other means.
Leading causes of bankruptcy in West Virginia
Some of the most common causes of bankruptcy in West Virginia include:
- Medical debt. Unpaid medical bills have recently surpassed credit card debt as the leading cause of bankruptcy nationwide, NBC News reported. Unfortunately, due to high deductibles and out-of-pocket costs, even insured individuals often have to borrow in order to get the care they need.
- Credit card debt. When times get tough, people often turn to credit cards as a way to make ends meet. However, this short-term solution can have long-term consequences as interest piles up and people find themselves unable to keep up with the payments.
- Job loss. Especially for people who are already struggling to pay off their debts, unexpected job loss can quickly turn a difficult financial situation into an impossible one. Not only has the economic downturn put many West Virginia residents out of work, but jobseekers are often finding that new positions pay less and are harder to come by than in the past.
- Unmanageable mortgage payments. After the U.S. housing market collapsed in 2008, many people were left “underwater” on their home mortgages. For West Virginia residents who are behind on their mortgage payments, a specific type of bankruptcy known as Chapter 13 can often provide a way to get out of debt and stop foreclosure.
Talk to a bankruptcy lawyer to learn more
If you are struggling with debt and would like to learn more about bankruptcy, including the options that are available and which type of bankruptcy may be right for you, get in touch with an experienced bankruptcy lawyer in your area.