Atlanta and much of the nation has a seen a deflation of residential and commercial real estate values, which can erode the value of an individual or business enterprise, said Donald Ratajczak, the noted former economist for Georgia State and a consulting economist with Morgan Keegan & Co. Coupled with limited availability of funds, some of the same problems striking businesses are also hurting consumers.

“What’s the No.1 asset of a household—a house,” Ratajczak said. Already-leveraged homeowners have nothing to borrow against when home values fall. “The household doesn’t have any value left.”

Chapter 13 filings, which are a restructuring of debts for individuals and families, have grown at a slower rate than liquidations because fewer filers have incomes that permit a restructuring of debt and assets of value.

Under Chapter 7 liquidations, the assets of the filing party—with few exceptions— are surrendered to a court trustee and sold off, with proceeds going to creditors to forgive most unsecured debts.

Another trend emerging in bankruptcy is the conversion of business Chapter 11 restructurings to liquidations, such as what happened to failed retailer Circuit City.

Some companies—particularly retailers and developers—that file for Chapter 11 reorganization are more often being liquidated when new buyers can’t be found, Williams said.

Chapter 11 cases are roughly flat from last year, according to court data.

“What you see in those numbers is misleading because there’s no rehabilitation going on,” he said. “These are orderly liquidations.”

Liquidity remains tight as the credit markets remain slow to thaw for businesses squeezed in a cash crunch. And consumers and business have reduced spending.

“When you put that all together you get a situation like what we have here with bankruptcies increasing across all debtor categories,” Williams said.