Patricia L. Brown & Associates
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Is Bankruptcy In Central Texas Your Fault?

For my central Texas clients, the two leading causes of bankruptcy are personal or family illnesses with no or inadequate health insurance, and the loss of a job. This is not unusual: As many as 62 percent of bankruptcies were caused by medical costs, according to a Harvard study. Close to three out of four health-cost related bankruptcies are filed by people whose health insurance, unfortunately, was inadequate. Nationally, about 22 percent of bankruptcy filings are linked to a job loss.

Another cause is foreclosures. Because of the relatively strong economy of Texas and the absence of the boom/bust real estate cycle, folks relocate here while trying to sell their "underwater" homes where they came from. If the homes don't sell and another home in Texas is purchased, bankruptcy can result.

Unfortunately, cases of insolvency are clearly on the rise. According to a study by the Federal Reserve Bank of St. Louis, personal filings in the United States increased from 1.2 per 1,000 people in 1980 to over 5.4 per 1,000 people in 2005, an increase of nearly 350 percent. In terms of annual growth, personal filings per 1,000 people have been growing at an average rate of nearly 7 percent, about 1.5 times greater than the average rate of annual per capita GDP growth.

This trend was reversed in 2011. According to, bankruptcy filings dropped a steep 12 percent in 2011, and while some experts attribute it to more cautious consumer spending and a decline in credit card debt, others say that we're just running out of people who can benefit from filing. Fewer than 1.37 million filings were recorded in 2011 for the 50 states and District of Columbia, according to data from Epiq Systems, compared to almost 1.55 million the previous year.

Personal filings vary significantly from state to state. Nevada leads the country with the most per-capita bankruptcy filings, chalking up nearly 9 for every 1,000 residents. Texas is actually among the states with the fewest personal filings at approximately 2-2.9 per 1000 residents. Thankfully, bankruptcy no longer has the stigma which was once attached to it, because of the real estate collapse and the financial crisis. Millions of Americans were left holding the bag, usually through no fault of their own. Consult with an attorney close to you to understand your rights.

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