Georgia's crowded federal bankruptcy courts handled 66,925 filings during the first 11 months of the year, a 22 percent increase over the same period in 2008, according to statistics compiled by the National Bankruptcy Research Center.
Only Nevada and Tennessee posted higher rates, according to the center. Personal bankruptcy filings nationwide hit nearly 1.3 million between January and November, up 32 percent over 2008.
High unemployment, the decimated real estate market and a slate of creditor-friendly laws fueled the bankruptcy numbers in Georgia, experts said.
Georgia's position near the top is nothing new. The state has had one of the nation's highest bankruptcy rates for years.
What changed for 2009 were the profiles of those filing, with the ranks including plenty of people for whom financial instability is a new experience.
Richard Thomson, a partner at Clark & Washington, a high-volume Atlanta bankruptcy law firm, said that early in the economic downturn his firm took on lots of Realtors and contractors as clients.
"Now other professionals, we're seeing them come in more and more," he said. "They are higher income and have a lot more assets, a lot more items like boats and motorcycles and four-wheelers."
Consumers in financial trouble don't have the opportunities of the past to stay afloat: New jobs or second jobs are hard to find, and home equity credit lines and credit card limits have been cut.
Howard Rothbloom, a high-profile bankruptcy attorney, said that, unlike in the past, he's regularly seeing clients who owe more on their homes and cars than they are worth, along with clients who can no longer afford second homes and investment properties.
He said clients have more debt than ever, including significant student loan debt and credit cards with escalating interest rates. He said he's seeing more men than women who have lost jobs and major income reductions for those who remain employed.
More than half of Georgians filing between January and November opted for Chapter 7 filings, according to the bankruptcy research group. Chapter 7 is liquidation in which most debts are wiped out, but so are assets that aren't protected by exemptions. Among the exemptions: $10,000 in home equity and a paid-for vehicle worth $3,500 or less.
A Chapter 13 filing, chosen by 47 percent, allows consumers to hold on to a house and car but requires that they repay a portion of their debts.
That split is new in Georgia, which for years has been dominated by Chapter 13 cases rather than Chapter 7 filings.
Georgia's foreclosure laws play a significant role. The foreclosure process occurs without court or government supervision and takes only weeks. No state has a faster process. A bankruptcy filing is the only realistic option for most Georgians seeking to delay a public auction of their homes.
The Average Filer
The average consumer seeking bankruptcy protection last year was a married white homeowner with an annual income of $43,000, according to statistics compiled by Consumer Credit Counseling Service of Greater Atlanta. This typical consumer has an average of $39,000 in unsecured debt, usually credit cards, on top of secured debts, usually a mortgage and car payment that cost more than $1,600 a month.
Most have run out of options for getting money from anyone but family and friends: The average credit score of those seeking bankruptcy is 529.
Last year's average bankruptcy filer had debts exceeding assets by about $73,000. In 2008, the average filer wasn't quite so much in the red, with debts exceeding assets by $57,000.
-- Associated Press