Georgia's bankruptcy rate ranks 3rd nationally

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ATLANTA --- One in 50 Georgia households declared bankruptcy in 2009 between January and November, leaving the state with the third-highest personal bankruptcy rate in the nation.

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

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andywarhol
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andywarhol 01/03/10 - 09:07 am
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Although I realize some

Although I realize some people developed this debt through hardship, but the rest: A person that makes only $40K has no business having a mortgage and car payments over $1600/month. I clear $60K and my house payment, car payment, and Harley payment are all well under 1600/Month. Apparently the new trend with military is driving $50K cars and buying these $200K houses like the Indian Springs homes most of these are my pees that I outrank. No one is learning anything from this "crisis." We have many people suffering unnecessary hardships because they can't sell or rent their house when it comes time for them to relocate. My common sense tells me I better be able to afford this house payment and another if I have to relocate.

andywarhol
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andywarhol 01/03/10 - 09:12 am
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Correction, Most of these or

Correction, Most of these or my "peers"

andywarhol
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andywarhol 01/03/10 - 09:22 am
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I hate not being able to edit

I hate not being able to edit or delete. This is annoying!

andywarhol
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andywarhol 01/03/10 - 10:43 am
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This is one of my favorite

This is one of my favorite topics, as you can tell. Another bad thing is that 1/50 is extremely high, but what it doesn't capture are the people on the verge of bankruptcy and the others that didn't file for it, but they have collections chasing them around. The ratio of households in dire straights is clearly much higher than the 1/50 that actually filed for bankruptcy.

Augusta resident
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Augusta resident 01/03/10 - 01:17 pm
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I agree. I don't know anyone

I agree. I don't know anyone that filed because they lost their job or had serious problems. I do know alot of people thatfiled because they got in over their heads. Maxed out credit cards, financed furniture and bought expensive cars. They never lost their house or cars either.

andywarhol
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andywarhol 01/03/10 - 05:00 pm
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That's also what pees me off.

That's also what pees me off. I know a guy that filed and they let him keep his Harley Davidson!

corgimom
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corgimom 01/04/10 - 05:39 pm
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Well, I could tell you about

Well, I could tell you about my SIL that had income of $12,000 per year and when she went BK she had TEN credit cards and owed $81,000. She has no assets. But she IS surrounded by junk that she bought on ebay for her "collections" that is "worth a lot of money". Cookie jars. Dachshund figurines. McCoy ceramic pieces. Frankoma pottery. The junk that you buy in gift shops. Her house is crammed full of JUNK.

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