Consumer Bankruptcy Filings Grow 9% in 2010
Expect filings to increase during 2011.
U.S. consumer bankruptcies increased 9% nationwide in 2010 from the previous year, according to the American Bankruptcy Institute (ABI), relying on data from the National Bankruptcy Research Center (NBKRC).
The data showed that the overall consumer filing total for the 2010 calendar year reached 1,530,078 compared to 1,407,788 consumer filings during 2009. Annual consumer filings have increased each year since the Bankruptcy Abuse Prevention and Consumer Prevention Act was enacted in 2005.
“The steady climb of consumer filings notwithstanding, the 2005 bankruptcy law restrictions demonstrate that families continue to turn to bankruptcy as a result of high debt burdens and stagnant income growth,” notes ABI Executive Director Samuel J. Gerdano. “We expect that consumer filings will continue to rise in 2011.”
NBKRC’s data also revealed that the 118,146 consumer filings recorded in December 2010 represented a 4% increase from the 113,274 filings in December 2009. The December 2010 consumer filings also represented a 3% increase from the November 2010 total of 114,587.
Chapter 13 filings accounted for 30% of all consumer cases in December, a slight increase from November.
Chapter 7 of the Bankruptcy Code is available to both individual and business debtors. Its purpose is to achieve a fair distribution to creditors of the debtor’s available non-exempt property. Unsecured debts not reaffirmed are discharged, providing a fresh financial start.
Chapter 11 of the Bankruptcy Code is available for both business and consumer debtors. Its purpose is to rehabilitate a business as a going concern or reorganize an individual’s finances through a court-approved reorganization plan.
Chapter 12 of the Bankruptcy Code is designed to give special debt relief to a family farmer with regular income from farming.
Chapter 13 of the Bankruptcy Code is available for an individual with regular income whose debts do not exceed specific amounts. It’s typically used to budget some of the debtor’s future earnings under a plan through which unsecured creditors are paid in whole or in part.