The year 2011 saw an 11.7% drop in bankruptcy filings from 2010, according to a year-end study from Epiq Systems. In 2010, 1,561,008 people filed for bankruptcy, while in 2011 that number dropped to 1,379,113.
About 70% of the filings are Chapter 7, which allow individuals to discharge their debts completely (if they pass a means test first). About a third are Chapter 13 filings, where the individual pays back a portion of their debts over three to five years, and then the rest is discharged.
Experts are quick to warn, though, that the decline in bankruptcy filings does not necessarily signal an improvement in the economy. Bankruptcy filings usually are a reaction to access (or, more accurately, non-access) to credit. Today, people are still having trouble paying bills, but may be putting their spending on a credit card and forgo filing for bankruptcy.
The Federal Reserve has reported that consumer borrowing rose substantially near the end of 2011, suggesting that many people are relying upon credit more than in years past.
Experts believe bankruptcies will continue to decline in 2012.
If you find yourself in financial distress and need a solution, an experienced debt relief law firm such as Harold Shepley & Associates would be able to answer your questions with a free consultation.
Contact us today at 1-866-284-7062 or visit us at www.shepleylaw.comto find out more information on your debt relief options.