When could bankruptcy be a solution?

Over the weekend, you may have seen reports that our troubled economy has spurred an uptick in the number of consumers filing for bankruptcy -- eight percent more in October from September.

Consumer debt expert Dr. Karen Gross, president of Southern Vermont College in Bennington, says bankruptcy has taken on new interest given President-elect Barack Obama's call to reform bankruptcy laws.

While it's a last resort, Gross says sometimes bankruptcy is the best scenario.

"Most people don't file bankruptcy for many reason," she says. "There is still a stigma but it is one of the best available legal tools to help people restart their financial lives. It's not a happy moment, but in some instances, it is a suitable solution. The question is, when is that moment"

President-elect Obama has advocated reforming bankruptcy laws to make it easier for homeowners struck by illness of hardship to keep their homes.

Karyn Dettbarn, Albany branch manager of the Consumer Credit Counseling Service and a member of the CBS 6 financial Answers Team, says the laws were changed in 2005 to make it more difficult to file bankruptcy.

There are still cases where a person can file for bankruptcy and also keep their home.

Below are some of the bankruptcy numbers she shared:

*These numbers include clients who took bankruptcy courses online through the Consumer Credit Counseling website:

2007 Actual YTD: 7,872 bankruptcy clients (all of NYS)
2008 Actual YTD: 7,476 bankruptcy clients (all of NYS)

*These figures do not include any clients who took bankruptcy courses online through our website:

Capital District 1/1/07-10/31/07: 465 bankruptcy clients
Downstate (NYC Area) 1/1/07-10/31/07: 34 bankruptcy clients

Capital District 1/1/08-10/31/08: 384 bankruptcy clients
Downstate (NYC Area): 1/1/08-10/31/08: 74 bankruptcy clients