Will a double-dip recession lead to an increase in bankruptcy filings?

Will a double-dip recession lead to an increase in bankruptcy filings? "Recent employment data from the Bureau of Labor Statistics (BLS) indicate that the recession continues to have a direct effect on employment. The total number of nonfarm payroll jobs decreased by 131,000 in July, while the unemployment rate remained unchanged at 9.5%, according to the Bureau of Labor Statistics. As 143,000 temporary workers hired for the decennial census completed their duties, federal employment declined. Employment on private payrolls increased by 71,000. Thus, the national unemployment rate has increased. The Bureau of Labor Statistics reported that Oregon's unemployment rate remained unchanged at 10.5% in June 2010. The Bureau of Labor Statistics reported that Oregon's unemployment rate remained unchanged at 8.9 percent in June 2010.This is coupled with a housing market that remains unstable. In July, a total of 97,123 U.S. properties received default notices, a 1% increase from the previous month but a 28% decrease from July 2009. Realtytrac also reported that ""default notices in July were down 32 percent from their peak of 142,064 in April 2009."" In addition, Realtytrac reported that ""Foreclosure auctions were scheduled for the first time on a total of 135,248 U.S. properties in July, a 2% increase from the previous month but a 2% decrease from July 2009."" In July, there were 14% fewer scheduled auctions than in March 2010, when there were 158,105. In July, lenders foreclosed on 92,858 U.S. properties, an increase of 9 percent from the previous month and an increase of 6 percent from July 2009.Some have speculated that the economy is confronting a ""double dip"" recession, that is, a second decline in economic growth, followed by a decline in job growth and an increase in unemployment. It seems probable that this second economic downturn will force additional families that are already ""hanging by a thread"" into financial ruin. Many of these individuals will contemplate filing for bankruptcy. It should be noted that unemployment can have a significant impact on the type of bankruptcy a consumer can file and the outcome of the proceeding as a whole.Chapter 7 bankruptcy is the most prevalent form of bankruptcy. Since the implementation of significant modifications to the bankruptcy law, it has become more difficult to qualify for Chapter 7 bankruptcy. This is owing to a bankruptcy code provision known as ""means testing."" This essentially examines a household's income and debts to determine if the debtor meets certain requirements to qualify for Chapter 7 liquidation. Conversely, many individuals pursue Chapter 13 wage earner repayment plans. To qualify for this type of plan, the debtor must be employed and demonstrate to the court and trustee that he or she is able to make the required monthly payments. A prospective no-man's land exists between Chapter 13 repayment and Chapter 7 liquidation, in which the debtor previously earned too much to qualify for Chapter 7, but no longer qualifies for Chapter 13 repayment due to unemployment. A competent bankruptcy attorney can aid debtors in pre-petition planning to ensure that the correct case type is lodged. This may involve a review of income, assets, and liabilities, also known as ""means testing,"" or a reconsideration of the petition's filing date.
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