Growing Number Resorting to Bankruptcy

By Brandon Zimerman

As job losses mount, home prices fall and consumers find themselves unable to keep up with their bills and debt, a growing number are resorting to bankruptcy.

Bankruptcies across Long Island rose by nearly 40 percent last year as 7,515 residents and businesses filed for protection, according to court data. And most experts think they could continue to rise for at least another two years, until the economy can find its footing again.

"Bankruptcies lead in a relatively straight line to a deeper recession," said Pearl Kamer, chief economist of the Long Island Association. "They cause more layoffs on the business side, and they cause a deeper consumer pullback on the household side.

"They can also reinforce what she called the "negative feedback loop" - the circular effect of a bad economy. If layoffs increase due to businesses filing for bankruptcy, more consumers may have to declare bankruptcy. If consumers spend less because they are laid off -- or go bankrupt themselves -- more businesses will falter.

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