Recently, the bankruptcy filing rate came out and it shows that less Americans are filing for bankruptcy to eliminate their debt. According to the bankruptcy filing data, the number of Americans filing bankruptcy dropped from the same period last year ending September 30, 2012. The greatest decrease was those filing Chapter 7 bankruptcy which declined around 15%. The number of Chapter 13 bankruptcy filings also declined 10%. In 2010 the US saw a record number 1.6 million people filing bankruptcy for numerous reasons. In 2011, the decline began dropping the rate to 1.47 million bankruptcies and now it has further declined to 1,261,140. While this sounds like good news for the economy, it seems like bad news for a bankruptcy attorney.
Typically, the majority of people file Chapter 7 bankruptcy over all the other chapters. Because of the bankruptcy code changes back in 2005 and the real estate bubble bursting in 2007, we’ve seen an increase of Chapter 13 bankruptcy filings. Even though we had a slight decline last year, this is still way more than there has been historically. Many experts are wondering what in the world is going on. Unemployment is now a stated 7.7% which is low compared to the 8 to 9% it’s been for the last four years. The Federal Reserve has been quick to respond to the economic woes the US has had since 2007 with QE1, QE2, The Twist, QE3 and now QE4. All of these are nothing more than quantitative easing which in a nutshell is printing money to buy our way out of debt. In September, QE3 was announced with a reported $40 billion a month being printed to buy mortgage backed securities. All quantitative easing programs previously had a timeframe, but this one is to infinity and beyond. When everyone thought this was crazy, last week came QE4 for an additional $45 billion a month for the same reason. Once again there was no endpoint except the statement by Mr. Bernanke where he said that the Federal Reserve would continue the quantitative easing until the unemployment numbers dropped to 6.5% or below.
Historically, quantitative easing has not worked for any country that used it to get out of financial trouble. Did it work for the Weimar Republic when it tried it from 1919 to 1923? Nope, and it won’t work here either. These monetary policies are nothing more than kicking the can down the road where at some point in time the taxpayers will end up footing the bill. The scary part is the repayment cost usually comes through hyperinflation and higher taxes, nothing like stabbing a stake through the heart of an already fragile economy. The more money that is printed, the less the currency is worth. Considering all the facts, even though the bankruptcy filing numbers have declined, I think it’s a matter of time before new records will be set. I don’t think a bankruptcy attorney is really that worried about their career choice. In the next few years, we will probably see an increase in Americans losing their homes to foreclosure and many of them will have to file bankruptcy also. The young adults currently going to law school should consider becoming a bankruptcy attorney because the way the economy looks, their future would look bright.
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