Economy Not Recovering Fast Enough for Some

May 08, 2011

Economy Not Recovering Fast Enough for Some

Economists and other financial experts speak continually about signs of improvement in the US economy. With the overall number of bankruptcy and foreclosure filings showing moderate decreases nationally, some are saying this is an indication that the country is coming out of the recession. Others, however, are not so convinced, especially with the national unemployment rate hitting over 10 percent in February - the same percentage as one year ago. While foreclosure and bankruptcy rates are declining in North Carolina, the economy remains in a weakened enough state that bankruptcy continues to be the best option for some consumers.

North Carolina Unemployment Remains High, Foreclosures Decreasing

In North Carolina, some parts of the state economy are improving while others are lagging behind. Overall, the state's jobless rate remains high at 10.5 percent during January 2011. Rowan County had one of the state's highest individual county unemployment rates at 12 percent, with Stanley and Iredell Counties following at 11.8 percent and 11.5 percent, respectively.

North Carolina was one of a handful of states to have its foreclosure rates decrease overall in 2010. However, this decrease was not felt equally throughout the state, with some counties actually experiencing an increase in foreclosures.

For example, Mecklenburg County has some of the highest county foreclosure rates in North Carolina with one out of every 495 homes in foreclosure. Charlotte is one of the main reasons Mecklenburg's numbers are so high - in 2010 the foreclosure rate in the city increased by 37 percent over the previous year with one in 50 homes in foreclosure.

State Bankruptcy Filings Also Down

Nationally, bankruptcy filings were up 9 percent in 2010 with more than 1.55 million people filing for bankruptcy protection; the single highest number of filers since 2005. In North Carolina, the number of consumer bankruptcies has been on the decline overall, but some individual counties are recovering at a much slower pace and their bankruptcy numbers are much higher.

For example, counties in the Western District of North Carolina actually saw a 2.5 percent increase in bankruptcy filings in 2010. This is attributed in part to the high filings in Mecklenburg County as Charlotte continued to struggle economically. The trend appears to be continuing into 2011 as Mecklenburg County reported 160 new bankruptcy filings in January 2011. In comparison, Iredell County reported 37 filings and Union County reported 40 new bankruptcy filings during the first month of 2011.

The Middle District of North Carolina appears to be faring much better economically with bankruptcy filings down nearly five percent in 2010. Filings for 2011 remain low for counties in this region. For example, Carrabus County reported 14 new filings, Rowan County 22 new filings and Stanley County five new bankruptcy filings during January 2011.

The disparity between the two regions highlights the gap in economic recovery across the state. While North Carolina as a whole is in a much better position than many other states in the country, North Carolina still has a high unemployment rate and pockets of high foreclosure and bankruptcy rates continue to exist in the state.

Getting Help for Your Debts

If you have unmanageable consumer debt, medical bills that will not go away or want to find a way to keep your home out of foreclosure, bankruptcy might be the right option for you. There are two types of consumer, or personal, bankruptcy:

Chapter 7, also called liquidation bankruptcy, is the most common type of consumer bankruptcy. In this type of bankruptcy, debtors may have to sell some of their personal property, called "non-exempt property" to satisfy some of their debts. Most Chapter 7 filers, however, only own exempt property and are able to get rid of their consumer debts without losing any personal property. For example, in North Carolina, filers are allowed to exempt up to $18,500 in equity in their house and up to $3,500 in equity in one car.

Chapter 13, also called reorganization or wage earner's bankruptcy, requires debtors to create a three to five year payment plan to repay some of their debts. Once the plan has been successfully completed, any remaining debts are discharged. Chapter 13 bankruptcy is most often used by those who want to keep their homes out of foreclosure. Missed or late mortgage payments can be included in the repayment plan, allowing the debtor to become current on their mortgage.

Under federal bankruptcy laws, certain types of debt are not dischargeable. These include most student loans, certain unpaid tax debts, child support and other support orders, criminal fines, penalties and restitution and civil judgments.

In 2005, federal bankruptcy laws were changed. Those who choose to file for Chapter 7 now must pass a means test that examines an individual's income and expenses to determine whether he or she has sufficient disposable income to repay some of his or her debts. Those who do not pass the means test have the option of filing for a Chapter 13 bankruptcy instead. However, most people who wish to file for Chapter 7 usually qualify.

Contact a North Carolina Bankruptcy Attorney

Whether or not the economy across the country and in North Carolina is improving does not have much of an impact on those who are suffering under heavy debt loads today. Bankruptcy can help alleviate the stress brought on by missed mortgage payments, late bills and other financial worries.

To discuss your bankruptcy options, contact an experienced bankruptcy attorney today. A lawyer knowledgeable in bankruptcy laws can discuss the differences between Chapter 7 and Chapter 13 and help you decide which type might be right for your specific financial circumstances.

Article provided by The Baker Law Firm, P.A.
Visit us at www.bakerlawfirmpa.com