The showdown between Central Falls and its workers has continued into 2011. This time negotiations break down between the city and police and fire unions. When Central Falls ran out of options, they decided that filing Chapter 9 was the only option. Here’s the breakdown without the filing.

Central Falls: $5.6m Deficit

• $22m in expenses
• $16.4m projected revenue
• City services reduced to minimal levels
• Taxes increased to maximum levels

An incident earlier in the year in Idaho first drew national attention. Idaho’s Boise County filed for Chapter 9 protection after it had been determined that the county had violated federal law. The result was the county needed to pay $6.2m to a developer. Central Falls is facing a similar shortage. It is expecting a $5.6m deficit by next June.

A municipality to declaring bankruptcy seems to be an isolated incident, but it’s not. Locally in Georgia several counties have faced the risk of bankruptcy because they were unable to collect taxes on homes in default, including going through a bankruptcy procedure. This can also impact the cash flow of a municipality, which in turn can limit its ability to pay for services and obligations.

When a community declares Chapter 9 it distresses everyone. The value of the community decreases and as illustrated in Central Falls, the taxes that the community ends up seeking can go up, further hurting the buying power and ability to pay personal debt that many Central Falls residents are facing. The expected result can be a trickledown effect with and increased demand for people looking to file for Chapter 13 bankruptcy and Chapter 7 bankruptcy.

The news isn’t all good. It is expected that bankruptcy levels won’t fully peak off until consumer confidence levels are increased. Consumer spending plays such a critical role into bankruptcy filings. Recent news suggests that consumer spending may not be increasing soon and in fact a double dip recession could be already here.

• U.S. consumer spending fell 0.2% in June. This is the first decline since September 2009.
• There is typically a 12-18 month lag in consumer spending declines and increased bankruptcy filings

So what does this mean for the country? What does this mean for Georgia consumers?

Nationally the increase consumer spending is a potential leading indicator of why personal bankruptcy filings are expected to be at 1.4 million this year from a high of 1.53 million last year. This also means that personal bankruptcy filings could increase in 2012 if consumer spending trends continue.

If you facing high debt levels, bankruptcy is a legal option that you can explore. There are two types of personal bankruptcy filings, Chapter 7 and Chapter 13. They each offer different solutions to a debt problem.

• Chapter 7 bankruptcy, is also known as a straight bankruptcy. This is a good potential option if you have minimal assets and want to make a clean break.
• For those with high debts and assets that they are looking to protect, a Chapter 13 bankruptcy is a potential option. In a Chapter 13 you look to negotiate a repayment plan with your creditors.

Need an Atlanta Bankruptcy Lawyer? Contact Us:

Have a question about debt options? Contact Berry & Associates. With 10 metro Atlanta bankruptcy law offices, we have local lawyers than can help answer your questions on a potential filing.

The drop was the first in 14 months according to Alpharetta based Equity Depot, a company that tracks foreclosure notices published each month across the country.

Barry Bramlett, president of Equity Depot, told the Atlanta Journal Constitution that he was hesitant to say hat things were turning around until he saw better results from one quarter to the next, not month to month.

A record number of homes were threatened with foreclosure last year and economists expect the problems to get worse before they get better. According to a report published by RealtyTrac Inc, 2.8 million homes were threatened with foreclosure in 2009. The company projects that number could climb to between 3 million and 3.5 million homes this year.

Many homes that might have been pulled from foreclosure lists in efforts by the Federal government and states to help troubled homeowners. But banks have been slow to negotiate mortgage modifications, and have been even slower to make them permanent.

One way to stop foreclosure proceedings on your home is to file bankruptcy. Chapter 13 bankruptcy can give you time to make up arrears and delinquent payments on your mortgage.

If you are continuing to struggle to pay your credit card debt and keep food on the table for your family, you could benefit from a free consultation with a bankruptcy attorney.

To keep you head above water, are you paying debt, with more debt? That is one of the top warning signs that your debts are controlling you instead of you controlling your debt.

Barry Bramlett, president of Equity Depot, told the Atlanta Journal Constitution that fewer residential properties were involved in the December notices and that commercial real estate, including hotels, office space and manufacturing sites, are on the rise.

“Maybe we have reached the apex, but it is still unbelievable, in my opinion,” Bramlett said when describing the numbers.

The Obama Administration has promised that homeowners who need help staying in their homes, will get the help through mortgage modifications, but few have seen this help in the year since plans were announced.

Bankruptcy filings continue to climb as people look for any way possible to keep their home and stop foreclosures.

Once the homeowner is in the trial modification, they must stay current on their new mortgage payment for three months they can apply to turn the trial into a permanent modification.

A story about the issue in the Wall Street Journal, one mortgage servicing company in has 39,000 borrowers who are up to date on their trial payments, but only around 500 have received permanent modifications. It almost seems the pace is slower than getting the modification in the first place.

My guess is that many of these homeowners are facing collection calls and foreclosure notices waiting to get a trial modification on their mortgage.

I don’t think that bankruptcy would be right for all of these homeowners fighting to keep their homes, but it could be a solution that is much quicker and easier than this drawn out process that has no guarantee of success.

Filing bankruptcy will stop foreclosure on your home. It will clear some of your debts and might help to free up some income that could then be used to make the payments on your home.

Bankruptcy may sound like a drastic step, and it may be. But it helps to stop creditors from harassing you for payments you can’t make. It can give you the help you need to start your life fresh, free of the obligations that have you trapped in a downward spiral.