Matador Legal » Consumer Bankruptcy

Chapter 7 bankruptcies rise in north Georgia

Matador Legal — Thu, 30 Jul 2009 04:54:17 +0000

During the first months in north Georgia chapter 7 bankruptcies have risen from 9,584 last year to 15,363 this year, a rise of 60%. Total bankruptcies have risen from 18,124 to 24,328, according to US bankruptcy court for the northern district of Georgia

The challenge in the coming months would be for the retailers to continue to be in business in the wake of ever tightening credit markets. CIT, a lender to small and medium business had to be infused with $3 billion from the bond holders to continue to operate.

http://www.ajc.com/business/chapter-7-filings-up-103730.html

Bankruptcies rise in Massachusetts in second quarter

Matador Legal — Wed, 22 Jul 2009 06:30:36 +0000

The chapter 7 bankruptcy filings have risen by 58% in the second quarter. 4,489 filings were reported in the second quarter compared to 2,839 in 2008 q2. The number for 2009, q1 for chapter 7 was 3,285, indicating that bankruptcies in q2 have risen by 36.6% compared to q1 in 2009.

Bankruptcies rise in Utah by 62%

Matador Legal — Thu, 09 Jul 2009 11:20:21 +0000

Bankruptcies have risen by a staggering 62% for the half year period this year compared to the same in 2008. 6,817 bankruptcy petitions have been filed in this period compared to 4,216 last year. 4,403 of these were chapter 7,while 2,378 were chapter 13’s, 34 were chapter 11 and 2 were chapter 12, a rare form of bankruptcy used in case of a family farm protection

Pro se petitions add to the stress on Bankruptcy courts

Matador Legal — Tue, 07 Jul 2009 05:40:21 +0000

As the bankruptcy filings have been rising all across US, the courts have to deal with more petitions and also more time consuming petitions. This is creating an additional stress in the bankruptcy courts.

With more debtors unable to afford attorney fees, the pro se petition preparers business is booming. Pro se bankruptcies are those petitions which are prepared by the debtor himself, with the assistance of a bankruptcy petition preparer, who may or may not be a paralegal. Sometimes pro se petitions are not complete or have some documents missing.

All this adds to the load of bankruptcy courts, where judges and trustees need to more careful with pro se petitions, especially since the amendments in Bankruptcy laws in 2005 has increased the documents that need to be provided by the debtor by approximately 50%.

What is lien stripping in Bankruptcy?

Matador Legal — Tue, 07 Jul 2009 04:13:52 +0000

In a chapter 13 reorganization plan, the second mortgage can be converted into an unsecured debt and is payable according to the plan agreed by the bankruptcy court trustee, if the property value is less than the balance owed on the first mortgage, which itself should be less than a million dollars.

For example, if the home is worth $500,000, and the amount owed on the first mortgage is $525,000 then the second mortgage on this property can be considered as an unsecured debt and will not have a lien on the property. But if the property value is more than $525,000, this will not be possible.

Bankruptcies rise in the central district of California

Matador Legal — Mon, 06 Jul 2009 13:33:11 +0000

Bankruptcies, both consumer and business rose by nearly 63% in the first four months, compared to the same period last year in the central district of California. Chapter 7 filings increase by 64%, while Chapter 13 filings increased by 40%. Compared to 3 chapter 11 filings last year, this year recorded 11 filings.

More insights in research on bankruptcy numbers

Matador Legal — Wed, 01 Jul 2009 16:54:18 +0000

We have previously covered a research paper by Lars Lefgren and Frank McIntyre here. In this post we delve deeper into the research. The entire research paper is here.

Various researchers have found that the average amount discharged in a chapter 7 Bankruptcy varies from $30,000 to $36,000. For the year of 1997, the government expenditure and the write downs by financial institutions is as below:

Bankruptcies led to a discharge of $42 billion of consumer debt
State unemployment insurance programs paid out $20.3 billion
Temporary assistance for needy families paid out $23.2 billion
Medicaid cost for state and federal governments $160.3 billion

The broad conclusions of the study are below.

Harmonizing Garnishment laws across the states will reduce the cross state variance by a third. In the states with creditor friendly garnishment laws, the filing rates are more because a debtor is left with no other alternative than to file for a Bankruptcy.

Bankruptcies are more common where the average income varies from $30,000 to $60,000 a year and the debtor is in his late 20’s.

Bankruptcy numbers represent in large part the relative cost of formal and informal default.

http://timesandseasons.org/index.php/2009/06/explaining-the-puzzle-of-crossstate-differences-in-bankruptcy-rates/

Consumer Bankruptcies surpass 2004 levels in California

Matador Legal — Mon, 29 Jun 2009 08:25:14 +0000

The personal filings in the central district of California have risen by 75% this for Jan-April period compared to the same period last year. The bankruptcy filings have seen a see saw trend in numbers over the last few years.

In 2004, consumer bankruptcies were 60,300 for the southern district of California. Then in 2005, the congress passed the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, to make sure consumers did not abuse the Bankruptcy protection. This also increased the cost of filing tremendously, both for chapter 7 and 13.

Hence there were lower filings in 2006, about 17,600, down by more than 71% compared to 2004. In 2008, about 65,000 debtors from Southern California filed for Bankruptcy protection.

http://www.latimes.com/business/la-fi-cover-bankruptcy28-2009jun28,0,5985863,full.story

Consumer Bankruptcies rise in Colorado

Matador Legal — Mon, 29 Jun 2009 08:02:30 +0000

The Larimer County in Colorado has recorded 652 bankruptcy petitions this year compared to 1,248 for the whole of the last year 2008 according to US Bankruptcy Court. Out of these 588 or about 90% have been Chapter 7.

Overall there have been 10,557 filings in Colorado up to May 2009. For the year, it is expected that there will be 26,000 filings, compared to 20,943 filings in 2008.

The reasons for the individuals filing for bankruptcy can be diverse, but sometimes it is an accident, a car repair or a job loss. Most of the debtors belong to the technology and manufacturing sectors.

Research correlates Bankruptcy numbers to State laws

Matador Legal — Tue, 23 Jun 2009 16:28:18 +0000

A new research by economists Lars Lefgren and Frank McIntyre from the Brigham Young University has found that the prevalent state laws are more likely to cause higher bankruptcy filings. Noteworthy is the fact that this research was carried out during 1999-2001, across 50 states with a sample size of 28,000, before the new Bankruptcy law of 2005 took effect.

The study has found that in states with creditor friendly wage garnishment law, the incidence of Bankruptcy is considerably higher. In these states, to protect their wages, the debtor usually files for Bankruptcy. I other states with a similar situation, the debt remains an informal default.

The study also found that another factor is the percentages of Chapter 13 in a state. Usually when a debtor files for chapter 13 and is not able to keep up with the repayment plan, the debtor again files for chapter 13 or in some cases chapter 7. Hence these bankruptcies are counted more than once.

http://www.eurekalert.org/pub_releases/2009-06/uocp-sbr061809.php

http://www.deseretnews.com/article/705312221/State-law-is-factor-in-bankruptcy.html?pg=1