Jon Arnold
Studies show that people filing bankruptcy by about mid-year this year so far have increased by more than 45% over the number of people filing bankruptcy last year at this same time. This is true for both personal and business bankruptcy, which may be a sign of the times and an indication of the amount of financial pressure that people find themselves in.
One of the problems seems to be that when times are briefly good, people go out and spend money on big ticket items, only to find that the slightest change in their economic picture can unbalance a budget that was not well thought through, say experts.
“The new upward trend in bankruptcies reflects the economic reality of households under increasing financial stress,” said ABI Executive Director Samuel J. Gerdano. “We expect bankruptcy filings to continue to rise for the balance of the year.”
Further studies indicate that of all the people filing bankruptcy, they almost totally into three main types of bankruptcy, which are:
- Chapter 7 Bankruptcy -- This type of bankruptcy is possible for both business and individuals. The main purpose of this type of bankruptcy is to permit a fair and equitable distribution to all creditors of the filer's non-exempt assets and properties. If unsecured debts are part of the person's filing, and they are not reaffirmed, they may be discharged, although discharging is not guaranteed. This is attractive for many consumers who think that unsecured debt will be automatically discharged, but that is not always the case.
- Chapter 11 Bankruptcy – This type of bankruptcy is also available to both businesses and consumers, where the primary purpose of this type of bankruptcy is to rehabilitate a business to make it a viable business entity again, or for a consumer, to reorganize a consumer's finances and budget via a court-approved reorganization plan. This type of bankruptcy is sometimes difficult for a consumer to get approved, since it requires court authorization and approval, and many times the individual has not taken the time to investigate alternatives, and/or is simply guilty if inadequate or irresponsible budgetary planning.
- Chapter 13 Bankruptcy – This type of bankruptcy is limited to individuals, not businesses. The person filing this type of bankruptcy must have a regular income and means of support, and their total indebtedness cannot exceed specified limits. This is typically used to budget portions of the consumer's future earnings through a plan where unsecured creditors are paid, either in total or in an agreed-upon percentage of the whole.
One of the things that is noted by this recent study is that a majority of those seeking to file bankruptcy had not thoroughly investigated viable options. Instead, they relied on "old school advice" which does not understand the new bankruptcy laws which are much stricter and much more defined than they were in previous years, even though the bankruptcy laws still vary widely from state to state. The new bankruptcy laws make it much more difficult to file bankruptcy "on a whim". Many businesses and consumers have not done the necessary homework to find out, for example, if a debt consolidation loan would give them the breathing room they need to become viable again, without the expense and long-term negative effects that bankruptcy brings.
For more insights and further information about Filing Bankruptcy and for information on alternatives such as Debt Consolidation and a free bankruptcy evaluation from a bankruptcy lawyer local to you, please visit our web site at http://www.bankruptcy-data.com
Source: http://www.articlealley.com/article_204359_19.html
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