Fat Bankruptcy files reported in Nevada

Apart from the interest rates, bankruptcy files are also on the rise in the formidable economic fall. During the third quarter of 2009, bankruptcy claims have piled up almost reaching the 2005 pace C the year which holds the record in American bankruptcies according to Automated Access to Court Electronic Records.

In the beginning of 2009, bankruptcy files have grown to more than 1.07 million. Much of this record comes from the residents of Nevada, Tennessee and Georgia. They are considered to be of the highest tendencies to file such claims. On the other hand, people in the District of Columbia, Texas and South Carolina have been consistent in being the least likely to file bankruptcies.

Missouri and Utah were recorded move up in terms of likelihood of filing based on their per capita filings in the past two years. Still on the likelihood of filing bankruptcies, while the two states are on the move upwards, Louisiana is at a stable spot in the middle while it continues to recover from Hurricane Katrina.

When it comes to the number of raw bankruptcies filed, California has the greatest. It could be attributed to its equally large population. The state has recorded more than 150,000 bankruptcies during the first quarter of the year.

The table shows the ranking of bankruptcy files for this year in capita basis. That means the number of bankruptcy files per 1000 residents.

Source: Automated Access to Court Electronic Records (AACER)

There are generally two kinds of bankruptcies consumers can file: Chapter 7 and Chapter 13. Consumers file bankruptcy when they can no longer pay for their total debts or meet their obligations with their lenders. The first type allows creditors to discharge all or part of their client's debt while the latter, Chapter 13 the client could pay all or parts of the debt based on a payment plan.

Either type, filing for bankruptcy severely damages the credit score. It also stays on the credit report for as long as seven to ten years which makes it difficult for consumers get their credit and loan applications approved. This is the reason why many credit experts advise consumers to avoid filing bankruptcies and more importantly start practicing ways to avoid it.

Good money management is considered the best way to prevent bankruptcies from happening. Such includes having control over spending; not using the credit card when there is cash at hand, avoiding credit card offers, sticking to a realistic budget, buying only those which are actually affordable, getting covered by sufficient insurances, not making high-risk and speculative investment, and not incurring debt with others with questionable financial habits.

Consumers are also advised to call their creditors when they believe they can not meet the payment terms. Most creditors would be able to help by working out a special payment procedure to be followed until the consumer is able to fulfill the original terms. There are also creditors who allow their clients to give weavers that say they can not pay their dues in time, would have to skip payments but promise to increase future payments to make up. On the other, credit counseling services are also recommended as it works for a good number of consumers having debts problems.

Doug Nicholas

Doug Nicholas, a financial consultant by profession with a Masters degree in International Business from Brown University, is also an ardent writer. Though he has a full time job at one of the companies listed on Wall Street, he does manage to squeeze in time to follow his passion. He puts his ideas to words in his articles related to finance and business.