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Bankruptcy filings drop in July

Federal officials keep releasing numbers showing the nation's economy remains sluggish. Consumer spending fell slightly in June and unemployment remains high. The Labor Department says overall unemployment sits at 9.2 percent with the broader numbers, which include underemployed workers, is at 16.2 percent.

Despite the weak economic numbers, the American Bankruptcy Institute (ABI) says consumer bankruptcy filings dropped by 19 percent in July when compared to the same time frame in 2010. The July numbers show a 5 percent decrease from the number of bankruptcy filings recorded in June of this year. David Jones, president of the Association of Independent Consumer Credit Counseling Agencies says the decrease in the number bankruptcies is a bit confounding, given the state of the economy.

Jones says more people are seeking guidance on consumer credit, but he says credit counseling agencies are "able to help fewer of them because many of their situations are already so far gone." Jones says consumer financial conditions continue to decline in the current economy.

Curtis Arnold, who founded the website, tells Reuters "Delinquencies on credit tend to mirror the unemployment rate, and as long as that rate remains high, we will have challenges." However, in light of the drop in consumer spending, ABI Executive Director Samuel Gerdano says there is a lag-time of roughly 12-to-18 months between declines in consumer spending and the level of bankruptcy filings.

Ohio residents experiencing financial distress in light of high credit card balances, medical debt or underemployment can find relief under the bankruptcy code. An experienced Cincinnati bankruptcy attorney can assess an individual financial situation and provide guidance on the available options in seeking debt relief.

Source: Reuters, "Consumer bankruptcies fall despite soft economy," Jonathan Stempel 2 Aug 2011

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