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In spite of Georgias strong economy bankruptcy filings are at record levels During 1998 the number of filings exceeded 143 million nationwide with nearly 97 percent attributable to consumer bankruptcies These record filings in the midst of a booming economy and low unemployment is clear indication that the system is broken and needs reform This rapid rise in personal bankruptcies and a near-record high in business bankruptcies is a trend that must be reversed L Wesley Smith President of the Northwest Georgia Bank in Ringgold and the 1998-99 Chairman of the Georgia Bankers Association said We believe education is one of keys to help consumers and businesses understand the consequences of filing bankruptcy There are other alternatives to bankruptcy many people never consider simply because they oftentimes do not know what to do with mounting debts Far too many people consider bankruptcy as their first alternative instead of their last resort as contemplated by the bankruptcy laws over the years US bankruptcy laws were first written around the turn of the century to provide a fresh start for people who through hardship or loss were unable to meet their financial responsibilities No significant changes were made to this law until 1978 when Congress passed the Bankruptcy Reform Act making it easier for consumers to declare bankruptcy - and more difficult for creditors to collect debts There are three principal types of bankruptcy filings Businesses may file under Chapter 11 which in its simplest terms allows a business to remain in business and reorganize its debts while trying to reverse what seems to be a death spiral into oblivion Since creditors are held at bay cash flow usually improves and some businesses are able to work their way out of the filing over time Unfortunately there has been a growing trend by many businesses in Chapter 11 to extend the protection for years which was never the intent of the bankruptcy laws
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