A story by the Associated Press in the Shreveport Times highlights the increasing number of bankruptcies in Louisiana:
According to the Administrative Office of United States Courts, there were 18,268 bankruptcy filings in the state from Oct. 1, 2008, through Sept. 30, 2009, up 18 percent from the previous year’s filings of 15,412.
The number of businesses heading for court exploded during the most recent year. There were 844 business filings in Louisiana for 2008-09, up 38.4 percent from 610 for 2007-08.
During 2008-09, there were 17,424 nonbusiness filings, up 17.7 percent from the previous year’s 14,802.
While there are various reasons for these filings, the large increase in business bankruptcies in problematic. As small businesses file for bankruptcy or are on the brink of collapse, it is unlikely that they will begin hiring in the near future. With unemployment in Louisiana sitting at 6.7% the last thing we need are more businesses failing.
On the bright side, 65% of bankruptcy filings in Louisiana are classified as a Chapter 13, which allow people to pay off debts over a three to five year period, down only 3% from 2007. This could indicate that many people, and businesses, are simply restructuring rather than liquidating, and once this process is complete can restart the hiring process. Ultimately, this could create businesses which are better organized and more prepared to weather economic downturns in the future.