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New Years

There were 10,634 bankruptcy cases filed in the Alexandria bankruptcy court in 2009.  That broke the record of 9,769 set in 1997.

About 750 of those cases were my clients, and each had their own series of events that brought them to my office.

Many were directly related to the mortgage crisis.  (In the last half of 2007, it seemed like half the people I saw were either people who worked in real estate or the mortgage business, or people who had gotten into mortgages that never made any sense.)   But the recession itself has now passed the real estate crisis as the biggest economic cause of personal bankruptcies.   Layoffs, reduced hours and reduced pay, people who just can’t get work.

National studies show the biggest cause of filing bankruptcy, year after year, is medical.  Either medical bills, directly, or lost time from work for medical reasons, or medical expenses for other family members that ends up on the credit cards.

Divorce often goes hand in hand with bankruptcy, as the costs of living separately is almost always more than the cost of living together.  (Some of those divorces are causes by the financial stresses, and now and then I think a marriage could have been saved if people had come to see me sooner, instead of fighting with each other about their lack of money.)

Nationally, there were 1.4 million personal bankruptcies in 2009.  The American Bankruptcy institute expects the number to go higher in 2010.   The national record was set in 2005, when Congress passed the new bankruptcy law, which many people feared would make filing bankruptcy far more difficult.

The cities and counties served by the Alexandria VA bankruptcy court have a population of two million people–that’s about 1.5 million adults.  That 10,000 bankruptcies represents about 15,000 adults, since about half are husband and wife cases.  So pretty close to one out of every hundred adults in Northern Virginia filed for bankruptcy last year.  At that rate, about half of all Americans file bankruptcy at some point in their lives.

(Bankruptcyaction.com keeps an update on national statistics.  http://www.bankruptcyaction.com/USbankstats.htm)