Bankruptcy rates in New York may rise as the unemployment rate drops

Financial experts across the country are predicting an increase in bankruptcy filings for 2014. The projected jump is connected to the current decrease in unemployment rates.

New York experienced notable drop in unemployment rate

Nationally, the unemployment rate decreased over 2013. The United States Department of Labor Bureau of Labor Statistics reports the national jobless rate was 6.7 percent in December of 2013, down from 7.9 in December of 2012.

The Bureau also noted that New York experienced a statistically significant drop in the unemployment rate from December of 2012 to December of 2013, dropping from 8.2 percentage points to 7.1 percent. A large portion of this jump occurred from November of 2013 to December of 2013, when the rate dropped from 7.4 to 7.1 percent. Although these percentage changes may seem negligible, they translate to almost 100,000 jobs created in New York alone.

How an increase in job availability could translate to an increase in bankruptcy petitions in New York

It may seem counterintuitive, but an increase in job availability can lead to an increase in petitions for bankruptcy relief. An article out of Tennessee addresses this phenomenon, noting that individuals may have avoided filing for bankruptcy while receiving compensation from unemployment. Once this individual gets a job he or she may be motivated to strive for financial success. A key role in this success could be a fresh financial start.

Bankruptcy is a constitutionally protected right providing individuals and businesses with the ability to receive a fresh financial start. This fresh financial start can come in a variety of forms. For individuals seeking relief, the most common forms of relief are found in a Chapter 7 or Chapter 13 petition. Essentially, if granted, a Chapter 7 petition allows an individual to discharge certain debts. This removes the individual's responsibility for repayment. In contrast, a Chapter 13 petition leads to a court supervised repayment plan that is intended to provide a more manageable payment schedule.

Importance of legal counsel

It is important to make this decision carefully since filing for bankruptcy relief can have a negative impact on the filer's credit score. As a result, if you are considering bankruptcy relief it is wise to contact an experienced New York bankruptcy and foreclosure attorney. This legal professional will be able to discuss the process and help you make a decision that better ensures your future financial success.