U.S. business bankruptcies rose 38 percent last year, to a record since bankruptcy laws were changed in 2005, according to a bankruptcy data firm on Tuesday.US home sales plummet, personal bankruptcies soar
There were 89,402 bankruptcy filings by businesses last year, compared with 64,584 the previous year, according to data compiled from court filings by Automated Access to Court Electronic Records, which is part of Jupiter eSources LLC in Oklahoma City.
Personal bankruptcies jumped to 1,357,565 last year, from 1,031,562 the year before.
The data included bankruptcy codes Chapter 7, 11 and others. Consumers often use Chapter 7 to get a new start on their financial lives. Chapter 13 lets people discharge some debts. Businesses typically use Chapter 7 to relieve themselves of debt and Chapter 11 to restructure debt and operations.
The numbers have been "steadily up," said AACER President Mike Bickford. "I don't think (2010) will be less than 2009. I think what's going to tell the tale for 2010 is the first quarter."
Inquiring minds are reading US home sales plummet, personal bankruptcies soar
An important measure of future home sales fell far more sharply in November than economists had expected. The National Association of Realtors (NAR) index on pending home sales�contracts agreed upon but not finalized�dropped by 16 percent in November, more than three times what economists interviewed by the Dow Jones Newswires had anticipated.The above links thanks to "Tin Hat" and "Czarchasm Reigns"
The pending home sales index registered declines in every region: 26 percent in the Northeast and Midwest, 15 percent in the South, and 3 percent in the West.
The NAR report follows the release last week of a Case-Schiller report showing home prices were flat in October, in spite of the surge in purchases based on the home buyer tax credit and exceptionally low mortgage interest rates. This was not enough, a Tuesday New York Times editorial points out, �to overcome the drag created by a glut of 3.2 million new and existing unsold single-family homes�about a seven-month supply.�
�The situation, we fear, will only get worse in months to come,� the Times writes, citing increasing mortgage rates, the eventual ending of the home buyer tax, and an anticipated �flood� of foreclosed homes.
Foreclosures continue to increase. In 2008, more than 1.7 million mortgages fell to foreclosure or similar actions. In 2009, the number swelled to 2 million, and in 2010, the figure is expected to increase to 2.4 million, according to Moody�s Economy.com.
The looming glut of new foreclosed homes will drive down home values by as much 10 percent next year, bringing to 40 percent the four-year drop-off, the New York Times reports.
How To Find A Bankruptcy Attorney
For a report on consumer bankruptcies including how to find an attorney specializing in bankruptcies please see How to Find a Bankruptcy Attorney; NV, TN, GA Top Filing List; One in 35 Nevada households filed for bankruptcy in 2009
Here are some interesting comments to the above post.
James Cole: Nothing exposes the fake recovery like statistics such as these. Bankruptcy at these levels in the midst of recovery? Tax receipts turning in another terrible month in December as the economy and retail sales rebound? Bankruptcy can get a family out from under for a time, but when you walk out of the lawyers office, you still need, food, clothing, transportation, health care and the rest. If you went BK because you lost your job, then you are still screwed.
Kill The Debt: National Association of Consumer Bankruptcy Attorneys at www.nacba.org is great consumer BK resource. I give that site out a couple times a day consulting with consumers.
Another great consumer attorney resource if you have been victimized by debt collectors or predatory lending or mortgage fraud is: The National Association of Consumer Advocates at www.naca.net
FatBeard: Bankruptcy is one way to get "mark-to-market".
Leo Chen: So let me get this straight. Iceland's national bank is in default. Argentina was in default. Greece is teetering on the verge of bankruptcy. The Golden State of California can't pay its bills. Florida, Nevada, Michigan, NY, Arizona; they're all running out of money to operate -- the list covers most of the U.S. So what happens when you can't pay your bills? It's a good thing that we have a dominant military.
Birth Death Nonsense
Mish says, take another look at those bankruptcy statistics. Then take another look at the infamous Birth/Death adjustment for jobs.
From Jobs Contract 23rd Straight Month; Unemployment Rate Drop to 10.0%
Birth Death Model Revisions 2009
click on chart for sharper image
That bottom line in numbers is in thousands. It represents the net number of jobs the BLS adds to the payrolls every month due to the birth and death of businesses.
Somehow, in spite of the deepest recession since the great depression, with personal and corporate bankruptcies soaring, the BLS assumed an average gain of 107,000 jobs a month since February due to net business expansion.
That is how ridiculously distorted the jobs data from the BLS is every month.
Massive Revision Coming
There will be a massive revision in February (starting with the January 2010 data), but we still have to suffer through one more month of sheer BLS nonsense this Friday when the December 2009 jobs data is reported.
Most expect a net gain of jobs. I don't, but the BLS might show such a distortion anyway. If not, it will be a record 24 consecutive months of job contraction.
By the way, the question keeps coming up: "How will this affect the unemployment numbers?" The answer is it won't. Official unemployment numbers are based on the Household Survey, another flawed measure with different reporting errors and biases.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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