By: Zachary Pienkowski
U.S. consumers and businesses filed 388,485 bankruptcies in the third quarter, a 33 percent increase from a year earlier, pushing this year’s total to the highest level since 2005. (Bloomberg) While bankruptcy comes with a negative connotation, many of these bankruptcies are in an effort to restructure many of these struggling companies. However, with the unemployment rate soaring over 10%, and businesses continuing to cut back, many are turning to bankruptcy. It is not hard to connect the dots of the increase in bankruptcies with the struggling economy. Despite being a bad habit which has led to many of the financial problems people are facing, the tightening of credit has made it much harder to pay bills. People used to be less concerned with paying a bill because they were able to put it on their credit cards with huge limits and then just pay the minimum balance and never get out of debt. Now they are not able to get these credit cards and are forced to pay bills with only the money they have in their bank account. With many companies laying people off and the unemployment rate continuing to rise, many people are left with little in that account. Many creditors want to help customers stay afloat and not go under because it is actually more costly for them. Creditors get nothing from their customers when they file for bankruptcy, so many want to work with someone who is struggling and cut down the amount of the debt so both parties can win.