Bankruptcy Fever In Shelby County

        The state of the economy in Shelby County, Tennessee, like that of the rest of our country is presently in a downward turn. You can see every day in the news about a bleak housing market and the subprime mortgage crisis. Bankruptcy goes hand and hand with this scenario.

       Tennessee has the largest rate of bankruptcies in the nation and it is centered in Shelby County. This is in spite of a law enacted in 2005 to make filing for bankruptcy more difficult. At first the new law did slow the tide of filings, at least Chapter 7 and Chapter 11 bankruptcies. But filings actually started increasing in 2006 throughout 2007 in the form of Chapter 13 filings. Chapter 13 bankruptcies are where you pay the debts you owe instead of wiping them out as in a Chapter 7 filing. The debtor, through the bankruptcy court, works out new terms to pay back their creditors. Chapter 11 bankruptcies are corporate filings. 

       According to several articles I found the reasons for the high rate of bankruptcy in Shelby County, as well as the states of Georgia and Alabama which are also sited has having high rates of foreclosure and bankruptcy, are varied. One of these is of course are more people living below the poverty level and the predatory lenders who actually seek these people out. There are not a lot of pluses in the current economic crisis but one that I see is that a lot of these lenders have disappeared. There has been also more attention brought to the fact that laws are needed to control predatory lending. 

      Other reasons that were given for the high rates of bankruptcy here in Shelby County are the number of people who have no health insurance and a close proximity to gambling casinos. An example is the state of Nevada where residents have a higher average income than Tennesseans but a lot of uninsured. They also have an extremely high rate of bankruptcy. I understand the housing market really sucks there.

      Another interesting observation was the role of religion in a area being a reason for the acceptance of Chapter 13 filings because you do pay your debtors back. Also, as former Federal Reserve chairman Alan Greenspan as stated, there is an attitude of acceptance of bankruptcy now that did not use to be the case. It has lost it's social stigma.

     After years of doing foreclosure reference letters for attorneys I have noticed that in the cases of bankruptcy, it becomes a pattern or habit for some people. I have seen the same names filing again and again year after year. This tells me that the social stigma has definitely wore off.

    I think better education in money and finances would help people make better choices about their purchases and investments. That and remembering that we don't have to have it all now. It is wonderful thing to have a home and be financially secure. It would be nice if we could learn to take life a little slower and remember that we are supposed to give, not just take.