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Consumer Bankruptcy Filings On The Rise

Created: On December 24, 2008 @ 10:41 am In

U.S. consumer bankruptcy filings increased 39.2 percent nationwide in November from the same period a year ago, according to the [1] American Bankruptcy Institute (ABI), relying on data from the National Bankruptcy Research Center (NBKRC). The overall November consumer filing total of 99,925 represented a slight decrease from the October total of 106,266. Chapter 13 filings constituted 32.7 percent of all consumer cases in November, a slight increase from October.

“While new bankruptcies dipped slightly in November from the yearly high reached last month, we are still on track for nearly 1.1 million new cases this year, the highest figure since Congress changed the bankruptcy laws in 2005,” said ABI Executive Director Samuel J. Gerdano. “We expect the alarming rate of personal bankruptcies to continue well into 2009.

Most consumers explore options like consumer credit counseling and debt settlement prior to filing bankruptcy and many wind up delaying the inevitable longer than they should. The stigma many attach to bankrutpcy forces them to do whatever possible to avoid this solution.

Consumer Credit Counseling can be an effective solution if you are current on your payments, can afford the existing minimum monthly payments, and are simply looking for a way to reduce the interest charges and accelerate the payoff of the existing debt.

Debt settlement is beneficial for consumers who have fallen behind on their payments and are having difficulty making the minimum payments. You will need to accumulate enough money to settle your debts for approximately 50 percent of what you owe within 18 - 24 months.

Bankruptcy is likely an appropriate solution for those who face some or all of the following situations:

  • You cannot afford the minimum monthly payments on your debt
  • You cannot accumulate the funds necessary to settle your debts within 18 - 24 months
  • You are having difficulty dealing with the collection activities of your creditors
  • You are being sued for failing to pay back a debt
  • Your wages are being garnished
  • You have fallen behind on your mortgage or rent payments

Consumers can eliminate most, if not all, of their debt through a Chapter 7 bankruptcy or implement a repayment plan through Chapter 13 bankruptcy.

Chapter 7 bankruptcy requires that you pass a means test to show that your income falls below a certain level or doesn’t exceed your expenses by a certain amount. All of your debts will be discharged with the exception of fines, child support payments, taxes, student loans, and any secured debts you wish to retain.

Chapter 13 bankruptcy is an option for those that do not qualify for Chapter 7 or do not want to liquidate their assets.  A repayment plan will be structured lasting up to 5 years. At the successful completion of a Chapter 13 bankruptcy, all debts included in the plan will be discharged.

If you think bankruptcy may be a better alternative than consumer credit counseling or debt settlement in your situation or simply want more information on your options, you should contact a bankruptcy attorney directly.

About the Author:
Chris Rocks is the Regional Director of the [2] National Credit Federation (NCF), a consumer advocacy group that assists small business owners and consumers overcome debt and credit challenges. He can be contacted by visiting his personal site, [3] GoodCreditLiving.com.

Article printed from DebtHelp.com Blog: http://www.debthelp.com/blog

URL to article: http://www.debthelp.com/blog/2008/12/24/consumer-bankruptcy-filings-on-the-rise/

URLs in this post:
[1] American Bankruptcy Institute: http://www.abiworld.org/AM/Template.cfm?Section=Home&CONTENTID=55789&TEMPLATE=/CM/ContentDis

[2] National Credit Federation: http://www.nationalcreditlawyers.com
[3] GoodCreditLiving.com: http://www.goodcreditliving.com