Bankruptcy Statistics Surrounding the New Bankruptcy
Laws
The new bankruptcy laws made an impact
on bankruptcy statistics. Filings soared before the
deadline when the new laws went into effect. Filings then
went down for a couple years and now they are heading back
up. The new bankruptcy laws were intended to stop
bankruptcy filings for those who do not need to file and make
the whole process a learning experience rather than simply a
legal process.
Bankruptcy used to be a quick way to get rid of debts.
Now, though, more and more people are forced to file under
repayment plans instead of discharging debts. The new
laws also require education about credit and assistance to help
people learn how not to get into financial trouble again after
they file their bankruptcy.
The concept of the new bankruptcy laws is a good one.
It makes this process more streamlined and helps prevent people
form abusing the system. It also made many people nervous
because they may be unable to use the bankruptcy system to end
their debt problems.
The Effect of the New Laws
The bankruptcy statistics available prior to the October
2005 initiation of the new bankruptcy laws showed that the
filings in that last month were triple the average.
In fact, over that last year before the new laws went into
effect there were record breaking numbers of people filing
bankruptcy in the country. With it being estimated that
one in every 53 households filed bankruptcy in 2005, the
bankruptcy statistics for 2005 were the highest ever in
history.
Most bankruptcies filed in 2005 were individuals, not
businesses. The bankruptcy statistics comparing these two
groups show that 34,222 businesses filed in 2005 verses
1,748,421 individuals.
Chapter 7 bankruptcy statistics showed that 17 % more
bankruptcies under Chapter 7 were filed n 2005. Business
bankruptcy under Chapter 11 actually went down.
A surprising bankruptcy statistic from 2005 was the increase
in the number of Chapter 12 filings. Chapter 12
bankruptcy is for farming families. Chapter 12 bankruptcy
went up by 53%.
After the new laws went into effect the bankruptcy filing
rates dropped by 50% or more, leading to the lowest bankruptcy
statistics in years.
The Effects Today
As the economy is getting worse bankruptcy filings are back
on the rise. However, the number of Chapter 7 filings
will likely never be as high as they were in 2005 before the
new laws. In fact, the total number of filings will
likely remain lower than that record breaking year simply due
to the restrictions put in place by the new laws.
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