Chicago is a city whose businesses have been hit every bit as hard as the rest of the country.

Tight credit lending, the rising costs of risk-related investment and ventures, and a slow economy with a surplus of low-value property have left businesses struggling to survive.

According to a recent article in the Chicago Sun-Times, more and more businesses are looking to chapter bankruptcy to help them weather the economic storm. In 2009, 1,795 businesses in the Chicago area filed for bankruptcy. That’s a 68 percent rise from the year before.

The two years before that, bankruptcy filings rose 63 percent and 59 percent, marking a long trend of increased struggles for Chicago businesses.

Statistics don’t show any sign of bankruptcy relief on the horizon. According to the federal courts, those bankruptcy filing numbers don’t show signs of dropping so far in 2010.

These levels of bankruptcy filings are higher even than before bankruptcy laws tightened in 2005, and led to a drop in filings. The new laws forced faster Chapter 11 bankruptcy reorganization, and made the process more arduous. The law led to more businesses looking for alternate ways to reorganize their debts and meet the demands of creditors.

The Sun-Times article offered three examples of how the weak economy, the real estate bust and the tightening credit markets have led to the current climate for bankruptcy filings in Chicago.

In the first example, a real estate developer found that plummeting property and land values left him with few options outside of Chapter 7.

Owning numerous properties in counties in the Chicagoland area, this developer was left with loads of vacant land that had lost its value when the mortgage meltdown occurred and the economy tanked.

He was also saddled with $57 million in debt. He had no choice but to file for Chapter 7 bankruptcy after the banks came calling and he wasn’t able to keep up with his loans.

The second example highlights what happened when regular working folks found themselves falling victim to the subprime mortgage crash.

This couple lived in a Chicago neighborhood, and got a subprime mortgage on four apartments, one of which they decided to live in themselves. They would rent out the rest to others.

When the subprime mortgage bust hit, their mortgage rates were set higher. To top it off, several renters in their properties lost jobs and were no longer able to pay their rent.

When the debt got overwhelming, the couple filed for Chapter 7 bankruptcy protection. They lost all of the property they had acquired.

Finally, the last example is that of a handyman business owner. His business featured six employees, and was riding a wave of success. Then he was told that his worker’s compensation rates would have to rise by a lot, from a few thousand dollars to more than $50,000. He is currently challenging the insurance company’s raise in rates, and he is considering bankruptcy as a possible option.

“Many small businesses, just like many households, are within one calamity of being in bankruptcy,” bankruptcy lawyer David P. Leibowitz told the Sun-Times. He concentrates on bankruptcy and foreclosure.

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