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personal bankruptcy

Record Number of Personal Bankruptcies in 2010

Experts Expect the Number to Rise Further in 2011

FT. LAUDERDALE, FL – A record 1,530,078 bankruptcy filings were completed in 2010, an increase of 9% from the previous year. Experts expect that number to climb even higher in 2011. Steven Stark, Chief Operating Officer of A New Horizon, a nonprofit credit counseling organization, says that many consumers turned to his company to avoid filing bankruptcy this year.

While the nation saw bankruptcy filings rise 9%, certain regions have experienced even higher numbers. In South Florida, bankruptcy filings were up by a staggering 40%. According to Stark, many clients seeking the help of his organization hail from states hit the hardest by the mortgage crisis, including Florida. “Our credit counseling and debt management programs help many consumers avoid bankruptcy, but it’s imperative that people seeking help do not delay or simply ignore paying their bills,” says Stark.

Other states hit especially hard include California and Arizona, where bankruptcy filings increased by 25% and 23.9%, respectively. Tennessee fared the best, with the rate of filings actually falling over 7%. The vast majority of bankruptcies filed in 2010 were Chapter 7 liquidations.

Stark noted that his organization expects the rate of personal bankruptcy filing to increase again in 2011 as the ripple effect of the mortgage crisis and prolonged high unemployment begin to affect new markets and demographics. “The best thing people facing insurmountable debt can do is get help early,” says Stark.

Experts suggest that credit counseling and debt management can be good alternatives for bankruptcy if consumers secure help early enough. They stress, however, that those interested in pursuing one of those services work only with properly licensed nonprofit organizations.