Bankruptcy filings are up nationwide and could top 1.4 million this year.  This is the approximate level of bankruptcies that were filed per year prior to the new bankruptcy laws enacted in 2005.  Utah’s bankruptcy filings are up 62% from a year ago.  On a per capita basis Utah is ranked 13th so far this year in the nation, up from 20th and 37th in 2008 and 2007 respectively.  This is not a good trend.  You probably know one or more people who have declared bankruptcy.

People go through bankruptcy for many different reasons from a way to escape monetary judgments (like O.J. Simpson) to just trying to get a clean start after massive crushing bills (the majority of filings, I hope).

Bankruptcy is designed to give people a fresh start.  Many famous people have declared bankruptcy and rebounded from it.  These are people like Abraham Lincoln, Ulysses S. Grant, Mark Twain, Harry Heinz (Ketchup), Milton Hershey (chocolate), Henry Ford, Walt Disney, Larry King (twice), and Donald Trump (twice) among many others.  It was not the end of their life or financial fortunes.  Many people recover from bankruptcy and are able to move on with their lives and go on to relative financial security.

Bankruptcies and foreclosures are trailing economic indicators that show the effects of economic troubles. Unemployment rates near 10% will probably lead to greater numbers of bankruptcy filings in the future.

There are many causes for filing bankruptcy.  Some people live beyond their means always thinking that their income will somehow keep up with their spending and borrowing.  Some people may have an accident and not be able to work for several months and never can get caught up on the bills that continue to pile up while not being able to work.  Sometimes these accidents result in massive medical bills that are the cause of bankruptcy.  The blame game for why people are filing bankruptcy is not productive or useful.  It is good to be prepared and to live within your means but it is impossible to prepare for every eventuality that may befall you.

Whatever the underlying reasons for bankruptcy are the main cure is gainful employment.  People need to be able to work to be able to pay their bills.

The best way to create a prosperous and employed people is freedom and the free circulation of money.  Allow people to open businesses and compete on a level playing field and prosperity will be the result.  People will find ways to make money and to take care of their obligations.  The biggest obstacle to a free market is government regulation and taxation.

There are thousands and millions of people who have ideas for businesses and are short of funds and are unable to comply with all of the regulations to start up these businesses.  If the government got out of the way to let the free market work we would again be the most prosperous people on the planet.

Investment dollars are lacking right now.  The availability of credit is short and many people are finding it difficult to get the funding they need to start businesses.  Many Americans have accumulated Trillions of dollars in accounts outside of the country.  Part of the reason the money is still overseas is the IRS.  The IRS will assess financial penalties, plus interest, and then income tax on the money brought back in.  What if we just let the money back in tax and penalty free if it is used to invest in the economy?  Trillions of private dollars could flow back in to the country which would be a great benefit to everyone.

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