Two hundred and thirteen oil and gas companies in North America have filed bankruptcy since energy prices crashed in late 2014, and these companies have listed a collective $85 billion in debt.
Things have been particularly tough in the oil exploration service industry, as 108 of these firms have filed bankruptcy in the last two years. Things seem to be getting worse instead of better, as fifty of these 108 filings have occurred in the last six months. Observers say that when prices fell, exploration companies almost immediately began idling drilling rigs, a development that substantially reduced the demand for service companies. And, when the exploration companies did hire service firms, they often demanded steep discounts.
Two Texas-based service companies — one in Houston and one in Fort Worth — filed bankruptcy in the last week of October, bringing the monthly tally to nine.
Why People File Bankruptcy
Economic downturn forces many companies into bankruptcy, and in most cases, such downturns are completely beyond their control. In like manner, most consumer bankruptcies happen due to circumstances completely beyond the debtor’s control. Most people live hand-to-mouth; in fact, according to a recent Federal Reserve survey, almost half of Americans do not have the cash to pay a $400 emergency expense. In other words, most people have no financial cushion to deal with routine emergencies like:
- – Medical Bills: 56 million people incur more medical bills than they can pay. 1.6 million of these households file bankruptcy, making medical expenses the number one reason that people file Chapter 7 or Chapter 13.
- – Divorce: The excessive legal fees, coupled with the division of assets and court-ordered support payments, put most divorcing people on the edge of financial collapse. Wage garnishment and/or the cost of maintaining two separate households is often sufficient to trigger a filing.
- – Job Loss: A few workers receive advanced notice and severance packages, but most people are not that lucky.
Although business downturn is the chief cause of commercial bankruptcy, sometimes the wounds are self-inflicted, because a company might expand at an inopportune time or be hit with a liability lawsuit. Some, but not many, consumer bankruptcies are also caused by either short or long-term financial irresponsibility. Many people are not good with credit, and continue borrowing money until they can no longer make anything other than minimum payments. Others fail to adjust their lifestyles when their incomes drop. Yet even in these situations, the debtors are not entirely at fault. Before people get in trouble with credit cards, the banks must issue these cards. It is incongruous, at best, for moneylenders to continue providing credit to consumers and then complain because the debtors file bankruptcy.
In Chapter 7 bankruptcy, most debts are discharged within a matter of months and most debtors can keep most of their property; in Chapter 13, debtors have up to five years to catch up on secured debts, like mortgages and car loans, while they are under the protection of federal judges.
Count on Experienced Lawyers
In most cases, financial problems are not your fault, and in all cases, you have the power to change your situation. For a free consultation with an experienced bankruptcy lawyer in Chicago, contact the Bentz Holguin Law Firm, LLC. We give good people fresh starts.