Consumer Bankruptcy Takes a Plunge in 2013
The First quarter of 2013 saw a plunge in the number of bankruptcy cases that were filed. The overall number of consumer cases has fallen by 30%; with the biggest drops coming in states hit hardest by the recession.
The reasons for the decline include the fact that interest rates are lower and people are able to refinance their mortgage or credit. Additionally, a large number of people have already filed; therefore there are less people who have a short-term need to file.
While overall bankruptcies are declining, experts believe the factors that have caused bankruptcy to decrease may soon reverse.
For instance, Henry Hildebrand III, a Chapter 13 Bankruptcy Trustee based in Nashville expects chapter 13 bankruptcy filings will start to climb up again as homes continue to gain value and the employment rate gradually improves. This is because people will be filing to keep large secured debts, such as mortgages and vehicles. Unlike a Chapter 7 filing where someone’s property is sold and the proceeds are used to eliminate most debts, consumers file under Chapter 13 in order keep their assets; like their homes and cars, by establishing a plan payment for 3 to 5 years.
Another reason for the current decline is most likely the result of the decrease in consumer borrowing. Many consumers may be staving off filling by living on credit. The extension of the successive discharge bar date from 6 to 8 years in 2005 could also be causing a few re-filers to wait until they are eligible for another discharge.
If you are considering bankruptcy, the experienced attorneys at the Fears Nachawati Law Firm can help you navigate through the sometimes confusing process of filing a bankruptcy and get you back on track to financial stability. For a free consultation, contact our office at 1.866.705.7584.