An estimated 2.3 million Americans are facing a bankruptcy or insolvency situation, a new survey shows.
The Associated Press analysis of a survey of more than 3,000 bankruptcy lawyers shows that about a third of the lawyers surveyed said they were in trouble because of the costs of their jobs, while about one in 10 said they had lost money on work.
“It’s going to take a long time for them to recover,” said Stephen R. Murguia, an attorney at Murgi, Schurig & Co. in Arlington, Va., which provides bankruptcy and other legal services.
The bankruptcy law firm has worked with over 1 million clients.
“The more debtors are on the hook, the more they will be on the verge of bankruptcy,” Murgiuia said.
The AP analysis found that roughly half of the 2.2 million lawyers surveyed had debts of $100,000 or more.
A third of lawyers said their firm had filed a claim for back pay and interest.
About a quarter of the attorneys said they could not repay a $100 debt.
The most common reason cited by lawyers to be in trouble was an unpaid bill for legal services, which included court and administrative fees, attorneys’ fees, legal representation and legal fees paid to a client.
“People are just trying to make ends meet, and they’re losing money on that,” said Andrew Gorman, a lawyer at Baker McKenzie in Arlington.
He said the law firm could have taken more precautions to avoid these problems.
“We have a very high bar for how much money you can pay in debt,” he said.
“We don’t just say, ‘OK, we’re going to charge you $20 a month for a computer, $25 for a fax machine, and $30 for a phone.'”
Murguias firm has represented more than a million clients and has worked on more than 2 million.
The firm said the average client paid about $1,800 in fees in 2013, about 10% of the $11.2 billion in legal bills it handles each year.
The AP analysis also found that lawyers have to repay about $2 billion of the debt they incur every year.
More:The AP investigation also found about 6.7 million people had debts totaling more than $500,000.
About 9.7% of those owed that amount had been discharged from bankruptcy in the past five years, and 6.3% had been dismissed from bankruptcy.
“They’re not just making bad debts,” Muyal said.
He said the number of people who are filing bankruptcy was also down since 2013.
About 3.5 million people are in the bankruptcy program, the AP said.
Nearly 6% of them owed more than about $500 in debt, and 5% owed more $1 million or more, the report said.
About 7% of people said they are still on the brink of bankruptcy.
Many of the people surveyed said the process of filing bankruptcy took them away from their families, friends and jobs.
“I have a lot on my plate, and I don’t have time to think about it,” said Jennifer Rizzi, an account manager at Muyali.
Rizzo, who has been a bankruptcy attorney since 2012, said she filed for bankruptcy last year.
“This is one of the few things I can do now that I can be focused on,” she said.
She said she is able to keep working full time because she can be home from work for a full week.
About 10% said they have a large family, and 11% said their children have been harmed by the debt.
“You have to get out of your comfort zone,” Rizzia said of bankruptcy, adding that she had a hard time adjusting to being out of a job.
Muyali, which has offices in Atlanta, San Francisco, Seattle, Dallas and Portland, Ore., said the survey also found more than 10% who are facing foreclosure.
About 8% of its clients have taken out loans to pay for their debts.
Murgi said that about half of its employees are employed by private firms and about 1% are employees at public firms.
About half of Murgilis clients are in debt or on the process to be discharged from the bankruptcy.
About 4% of Muyilis business has been impacted by the recession.