Decline In Bankruptcies Not Necessarily Good News :: Charlotte Bankruptcy Lawyer

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A recent article on discussed the sad case of a Minnesota couple that has limped along for years without enough money to comfortably pay their mountain of bills. Though it may seem that such couples are in a good position to file for bankruptcy and get out from under their debt, the author of the article noted how the pair’s situation reveals a common problem: some people may not have enough money, or the right kind of debt, to file for bankruptcy.


The Minnesota couple fell victim to the recent recession, with each being unemployed or underemployed for years. The wife, Becky, had tens of thousands of dollars in student loan debt and a very meager income with which to attempt repayment. Her husband, Joel, had $30,000 in credit card debt and a sizable mortgage payment. While they were able to get rid of the house through a short sale, they quickly discovered that they lacked the ability to bankrupt their debts and start over with a clean slate.


Dubbing themselves “too broke to file,” Becky and Joel could not afford the retainer it would take to pay a bankruptcy attorney in Minnesota to file their claim for them and were too intimidated to do it on their own. Moreover, they realized that their biggest pile of debt was made of up student loans; something that was simply not dischargeable under current bankruptcy laws.


An expert interviewed in the article, Melissa Jacoby who teaches at UNC Chapel Hill, says that the case of Becky and Joel reflects the stories of an alarming number of couples that lack the resources to get out from under their debts. Jacoby points out that while the number of bankruptcy claims have fallen over the past few years, many people wrongly assume this is because the economy has improved. Instead, Jacoby says it may actually be the reverse.

The reason is that when the economy is booming bankruptcies have often been known to soar. As credit requirements become more lax, people decide to take more and more risk, something that increases debt and eventually leads to bankruptcy. Data shows that no such growth in personal debt has occurred following the recession, in fact, the only category of debt that has increased since the recession is student loans, an especially troublesome subject for many families.


Student loan debt has ballooned in recent years, recently passing auto loans and credit card debt. Now student loans represent the second largest category of debt after mortgage loans, something that experts say may spell trouble for couples like the one in Minnesota who find themselves stuck in a hole with no way out.


If you find yourself needing the services of a Charlotte, North Carolina bankruptcy attorney, please call the skilled lawyers at Arnold & Smith, PLLC today at (704) 370-2828. As professionals who are experienced in the bankruptcy arena, our attorneys will provide you with the best advice for your particular situation.



“Bankruptcy filings are plummeting,” by Annie Baxter, published at


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