Personal BKs Top 1.6 Mil
Seek Counseling Before Filing, Say Experts

March 2, 2004 - Statistics just released from the Administrative Office of the Courts point to an ever-soaring number of personal bankruptcy cases. 2003 saw the number of non-business bankruptcies filed in federal court increase from the previous year, with the total number of filings topping out at 1,625,208. Industry leaders predict much of the same for 2004.

"We are seeing more people than ever who are troubled with debt burdens," said Joanne Budde, president of Consumer Credit Counseling Service of San Francisco (CCCS-SF). "Most people are doing everything they can to make ends meet. They do not want to file for bankruptcy, but many don't know where to turn for help."

There is a common perception that those who declare bankruptcy do so because they have spending control problems or have been deliberately irresponsible with credit cards – yet statistics show otherwise. Unemployment and medical troubles are the predominant indicators of bankruptcy, with two out of every three filers having lost a job, and half having recently experienced a major health problem. "The pressure of unexpected hospital bills or being out of work can make people panic," remarked Budde. "Just sitting down with a professional and reworking a budget or setting up a debt repayment plan can save a trip to court – and the long-term ramifications of bankruptcy."

A study conducted by the Credit Research Center, a Georgetown University think tank on the effects of financial counseling found that for those in debt, seeking help from a reputable credit-counseling agency is key. The large majority of counseled borrowers had significantly fewer accounts, lower debt, and fewer delinquencies relative to other borrowers. "When people get support, they can better handle financial emergencies – resulting in fewer bankruptcies," said Budde.