July 19, 2010 Bankruptcies rise in 2010 with over 158,000 filing bankruptcy papers in the US in the month of March according to Aacer that collects the data. The Bankruptcy rates for 2010 have not decreased nor where they expected to as the historic values have proven in the past.
Aacer’s data shows bankruptcy rates for 2010 filings have hit a 5 Year high this hear since 2005, the pace is picking up although in May there were 133,459 filings for bankruptcy in the country.
Economists have stated that bankruptcies usually peak 12 to 18 months after a major economic event such as the Wall Street financial meltdown due to scam investments.
While consumers are for the most part working off personal debt for over purchasing consumer products mainly electronics this does not improve the economy as a whole. Even as other consumers hold on to their money and put more in savings retail sales and in general each sector of the economy is hit with the continuation of a slower growth period.
Personal Bankruptcy this year figures showed 146,000 filings in April 2010 which are predicted to increase next year due to the economic depression after the main event.
Outlook for 2010 and 2011
The story is not better looking ahead since historically the economy does not rebound until five whole years have passed from the economic downturn period which was 2008 during the financial meltdown. The businesses that had a heavy debt load prior to 2008 will be finding it more difficult to escape bankruptcy this year.
As jobs continue to disappear mortgage delinquencies are still rising in 2010 and from the Mortgage Bankers Association figures residential mortgage delinquencies were at 9.24 % higher in the second quarter of 2009.
The outlook for 2010 and 2011 even for prime fixed-rate loans with higher unemployment continuing to rise is that even the non-sub prime mortgages are becoming default mortgages.
Home foreclosures are expected to continue through to 2011 and perhaps beyond. Some people who take out a debt management plan the first step before bankruptcy is declared are still hounded by creditors by at least one in three. A decision to undertake filing for a bankruptcy is difficult even without harassment from creditors.
Even BP Oil has faced the fact that they could very well declare bankruptcy due to the rising costs of the oil spill in the Gulf. The expense which continues to drain BP’s cash flows in 2010 and 2011 while they clean up the damage to the US economy which also caused unemployment in the gulf region.
Bloomberg Newsweek reports today that Innkeepers USA trust which is a real estate investment trust, is filing for bankruptcy protection. The company based in Florida has 1 billion dollars in debt according to the US bankruptcy court report. Innkeepers has a financial interest in 73 hotels such as the Hampton Inn, and Hyatt Summerfield hotels.
TAGS: Bankruptcies still rise in 2010, Bankruptcies, insolvency, Debt management plans, creditors, bankruptcy outlook for 2011, economic downturn, Mortgage default, Mortgage Bankers Association, prime fixed rate loans, loan default, unemployment rates rise in 2011.