2010 has been a pretty rough year for many people in Arizona. Based upon predictions it looks like 2011 may be equally difficult. Max Gardner, a prominent bankruptcy attorney in North Carolina, has posted economic predictions for 2011. Here they are:
1. At least 20 cities will be forced to file for Chapter 9 bankruptcy relief and the defaults on municipal bonds will hit all time highs.
2. The number of Consumer Bankruptcy filings will reach an all time record and will easily surpass the total filings in 2005 (record year).
3. The unemployment rate will not drop below 9.00% and could top 10.00% before the end of the 2nd Quarter.
4. The Treasury will be forced to offer some type of financial bail-out plan for the States. Since States cannot file for Chapter 9 relief, they will default on their financial obligations and bonds without such assistance. Congress could even enact a new Bankruptcy Chapter for the States.
5. More than 60% of the states will have to impose “drastic” cuts in basic services and engage in the elimination and/or consolidation of state agencies in order to deal with growing deficits and declining revenues.
6. The Pension and Retirement fund obligations of private, state and local entities will surface as a major financial problem with hundreds of payment defaults.
7. The number of foreclosures will reach an all time record high but the worst years are still beyond 2011.
8. The total number of Real Estate Owned properties will hit an all time high.
9. The average value of residential real estate will drop another 10% to 15%.
10. The number of commercial defaults and commercial foreclosures will top all time records.
11. The Congress will fail to pass any new spending or emergency financial aid legislation, which will have severe negative implications for the economic recovery.
What Does This Mean for Arizona?
The above predictions are dire for sure and are even more daunting if you live in Arizona. Arizona has suffered through record highs in bankruptcy filings, record highs in foreclosures, and record highs in job losses. Many people I meet with tell me that they have been holding out trying to avoid a bankruptcy filing but simply can’t hold on any longer.
Economic Recovery Not Likely
In light of these dire predictions, the hoped for recovery does not appear to be happening in the near future. If you are in a situation where you are spending down your retirement, IRA, 401(k) or other savings simply trying to make the minimum payments on your credit cards, you should meet with a bankruptcy attorney before spending another dime.
Retirement accounts like 401(k)s and IRAs are exempt in the bankruptcy process, meaning that you can retain your retirement funds in full while eliminating debts such as credit card debts or even your second mortgage through a bankruptcy filing.
Rather than spend another year losing sleep and enduring endless collection phone calls, meet with an Arizona bankruptcy attorney and see how bankruptcy can help you get a fresh start and start on your road to recovery.
I offer a free bankrutpcy consultation where we can discuss your specific situation. I can be reached at (480) 648-8975.