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Bankruptcy filings are up, offer second chance to some debtors

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Although laws were changed in 2005 to decrease the amount of bankruptcies in the U.S., a new report finds that the number of people filing for bankruptcy is increasing.

Although laws were changed in 2005 to decrease the amount of bankruptcies in the U.S., a new report finds that the number of people filing for bankruptcy is increasing.

According to court records retrieved from the Associated Press, 1.2 million bankruptcies were filed in the last 12 months with 130,831 filing for bankruptcy protection in March - an 81 percent increase over March 2007.

Emory Clark, an Atlanta bankruptcy lawyer told the news provider that he sees the growing trend affecting almost everyone, although many are hesitant to file.

"There's something about human nature or American culture, but people hate filing for bankruptcy," Clark told the AP. "It really is a stamp of failure. Nobody wants to come in here and pay us money to file. They are forced in because of circumstances."

But while many people avoid filing for bankruptcy until the last possible moment, Bob Lawless, a professor at the University of Illinois College of Law says it does give many people a second chance.

"The point of the bankruptcy system is to give the honest but unfortunate debtor a fresh start," Lawless told the news provider. "The fact that people are waiting longer to file shows just how mean-spirited the law is."

Those who do file for bankruptcy also see a negative effect to their credit score and their ability to get a credit card - one option for them is a prepaid credit card which requires no credit check.


 
 
 
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