How Legal Aid Offices Can Offer Bankruptcy Assistance

If you’re struggling with a heavy debt load or an income that doesn’t make ends meet every month, you aren’t alone. Many individuals like you can find debt relief and can resolve troublesome financial issues for the long term with the help of bankruptcy. The two main chapters of bankruptcy, Chapter 7 and Chapter 13, offer debt relief options in the form of debt discharge in exchange for asset liquidation of non-exempt assets or as a reorganization of debts into a repayment plan. To determine if filing bankruptcy is the right choice for you, and to decide which chapter you should file under, Behm Law Group Ltd. offers expert legal guidance and comprehensive bankruptcy assistance in Redwood Falls, MN.

 

Bankruptcy is a highly complex and nuanced legal process that can be very difficult to navigate without the right knowledge and tools. Because of this, filing for bankruptcy with the support of an attorney is the best possible option for any filer. However, many filers have difficulty finding the money to hire a lawyer and they, sometimes, must find their own way through the filing process. In the scenario of helping to find an attorney who may agree to accept lower attorney’s fees, one of the best resources you can use is your local legal aid office.

 

Legal aid offices provide public, and sometimes free, legal information and support services. You can find a legal aid office/legal clinic near you through the American Legal Services Corporation. Legal aid offices are set up as a nonprofit, being largely donation- and volunteer-based programs. Participating lawyers and other legal professionals, as well as counselors and social workers, establish a system that can provide protection in some ways for those unable to completely afford legal representation, but primarily the organization operates as a resource of legal information.

 

If you plan to file for bankruptcy and you’re having trouble finding the money to hire an experienced bankruptcy attorney, you can turn to a local legal aid office for some direction.  Because bankruptcy can be a highly nuanced and complicated process, most legal aid offices do not have attorneys who handle bankruptcy cases.  However, many private attorneys may be affiliated with a legal aid office.  Attorneys who are affiliated with legal aid offices may agree to accept lower fee amounts for people who seek assistance through the legal aid office.  In order to possibly qualify for lower fees, you may have to undergo a screening process with the legal aid office and with an affiliated bankruptcy attorney.  In order to obtain assistance with the attorney’s fees, you really must, in good faith, not have any other options.  If you receive tax refunds or have a relative who can financially assist you, or have a life insurance policy or a 401(k) plan that you can borrow against, you typically will not qualify for lower bankruptcy attorneys’ fees through the legal aid office.  Generally, all of the basic information you’ll need to file a bankruptcy case can be available through the legal aid office, including information about:

 

  1. Pre-bankruptcy requirements
  2. Documents included in your petition
  3. How to find and fill out all the necessary paperwork
  4. How to pay and/or waive bankruptcy fees
  5. What debts you can have discharged or reorganized
  6. What assets you can protect from liquidation
  7. Post-petition requirements
  8. Overall court process

 

Certain more unusual or complex information may also be available, but you may find it difficult to know what to ask for that will be relevant to your specific situation.

 

If you are able to afford legal representation, it is generally recommended that you do so. Legal aid offices cannot always give information that will be helpful in the face of changes in your case. Each bankruptcy case is unique, and certain circumstances may cause unforeseen difficulties after you file a petition. Additionally, legal aid offices cannot protect you from creditor judgments or other obstacles that may arise throughout your case, whereas such assistance is available with the help of an experienced bankruptcy attorney.

 

To learn more about legal aid offices and bankruptcy assistance in Redwood Falls, MN, contact Behm Law Group Ltd. at (507) 387-7200 or stephen@mankatobankruptcy.com.

Part 2: How the 2020 CARES Can Affect Your Debt Relief

In the first part of this blog, we covered what debt relief options the 2020 CARES Act (Coronavirus Aid, Relief, and Economic Security Act) offers for mortgages, student loans, car loans, and property tax debts. This CARES Act, put into place on March 27th, 2020 in response to the novel coronavirus pandemic, establishes several rules and options for individuals facing extreme difficulties concerning income, debts, and state lockdowns.

 

As we work through this global recession, it’s important to remember that there are many options available to you for debt relief. One tool that is always available to you is to file bankruptcy. While this may seem like a drastic move, Behm Law Group, Ltd. has seen many clients use bankruptcy as a positive way for debt relief in Luverne, MN, especially in trying times like these.

 

During the period the CARES Act will be in place, there are additional options for debt relief on top of bankruptcy.

 

CARES Act Provisions, Continued

 

  • Credit Card Debt: Most major credit card providers are offering relief for their customers during this time. This includes credit line extensions, payment skipping, and forbearances. Talk to your bank to see how they can work with you if you’re unable to make credit card payments. Many banks and credit unions are also offering financial aid resources and loans for individuals and businesses while we get through this recession. This includes help for local businesses offered through the U.S. Small Business Administration (SBA).
  • Utilities and Others: More and more states are beginning to put suspensions on utility shutdowns and waive late fees. If you’re unable to make utility payments on time, the CARES Act and your state government’s own orders may protect you from late fees and from having your water, gas, and electricity cut off. On top of this, most phone and internet providers are waiving late fees and/or postponing shut offs due to missed payments. Some internet providers are also supplying free services to new customers or unlimited periods for existing customers.
  • Stimulus Check: The most direct source of assistance the CARES Act will provide is a stimulus check for each eligible citizen. Individuals with an incomes under $75,000 will receive a check of $1,200. Taxpaying families will receive an additional $500 per dependent under the age of 17. Spouses who file joint tax returns will receive $2,400. Individuals with incomes over $75,000 will receive smaller checks, reduced by 5% of their income over $75,000 (e.g.  income of $80,000 = stimulus check of $950).

 

The stimulus check and other relief options that the CARES Act puts into place during this trying time are established with the goal of protecting U.S. citizens from severe debt and the hopes that our economy will be cushioned in some ways from the worsening of the current recession.

 

To learn more about your options for debt relief in Luverne, MN, and filing for bankruptcy, contact Behm Law Group, Ltd. at (507) 387-7200 today or stephen@mankatobankruptcy.com.

Part 1: How the 2020 CARES Act Can Affect Your Debt Relief

In the face of the deadly coronavirus contagion and the significant effects that the spread will continue to have on the global economy, the U.S. government took some extreme cautionary measures. In addition to declaring a national emergency and deploying Federal Emergency Management Agency (FEMA) and National Guard relief, the federal government passed the CARES Act (the Coronavirus Aid, Relief, and Economic Security Act) on March 27. This act provides financial support to individuals struggling with little to no income during these uncertain times. The act may help to an extent, but the longer the pandemic continues, the harder it will be for many to keep making ends meet. If you are unable to make debt payments each month, you can find other sources of debt relief in Marshall, MN. With the help of Behm Law Group Ltd., you can use bankruptcy as one option to secure debt relief and long-term financial stability.

 

Bankruptcy can seem like a drastic option, even for those struggling significantly, but it’s a government-sanctioned process that has helped countless millions of individuals and businesses find their way through a recession like the one we, as a country, are working through now. The CARES Act offers some more immediate options for debt relief to all individuals as we continue to work through state lock-downs.

 

CARES Act Provisions

 

  • Mortgages: Anyone struggling to meet monthly mortgage payments has options for relief. Many homeowners are eligible for forbearances that provide short-term relief of their mortgage debt. This means you may skip some payments and spread the amount skipped throughout future payments. You may also be able to make a lump sum payment on missed payments later. In addition, many major mortgage providers—including Freddie Mac, Fannie Mae, VA-guaranteed, FHA-insured, and some federally backed lenders—have an imposed 60-day moratorium on foreclosures.
  • Student Loans: The CARES Act effectively suspended all collection activities and interest accrual on federal student loans for the next six months (until September 30, 2020), and these suspensions will be applied automatically. This act also suspends the reporting of negative credit information on credit reports, wage garnishments, and other collection actions on behalf of student loans during the national emergency.
  • Auto Loans: While there are no official federal rules with the CARES Act, many auto lenders are providing leniency to debtors. If you are struggling to make payments on your car loan, contact your loan provider. There is a good chance you’ll be able to delay payments or make other debt payment modifications.
  • Property Tax: Those with property tax debt or who are facing foreclosure because tax debt delinquency might be able to take advantage of a moratorium many counties are implementing. That moratorium varies by county, so check with your county treasurer’s office for more information.

 

In the second part of this blog, we’ll cover the additional resources the CARES Act offers for debt relief in Marshall, MN, during the coronavirus pandemic. To learn more about the options bankruptcy provides, contact Behm Law Group Ltd. at (507) 387-7200 or stephen@mankatobankruptcy.com.

 

 

 

Receiving Debt Relief as a Personal Guarantor

In 2008, the housing crisis changed a lot about how mortgages and other loans are handed out. Credit and income requirements are much higher, and many borrowers need another person or entity to sign as a personal guarantor in order to receive a loan.

 

Establishing a personal guarantee on a loan means you’ll be required to repay that debt in the event the primary borrower cannot. If you’re left to pay a debt and find yourself in a situation where you also cannot repay it, filing for bankruptcy may be the best solution depending on the type of debt involved and your additional financial circumstances. With the help of Behm Law Group, Ltd. you can file a successful bankruptcy case and receive long-term debt relief in Fairmont, MN.

 

Bankruptcy is a highly effective legal process that treats many types of debt. While there are some debts, such as child support, alimony and some tax debts, that are typically not included in a bankruptcy discharge, the majority of common individual consumer or business debts will be discharged. Some of the most prevalent debts for a typical person are mortgages, car loans, and credit card debts. All of these can be discharged through bankruptcy, and this is also true for personal guarantors that are responsible for another person’s or business’s mortgage, car loan, credit card debt, or any other debts.

 

When you sign as a personal guarantor, you’re accepting the fact that you could be asked to make payments on that debt if the primary borrower defaults by missing a payment. If the primary borrower defaults for an extended period of time, the continued debt payments owed could accumulate to an amount that you yourself are unable to pay. If you file for bankruptcy, this debt will be discharged in a Chapter 7 case or included in a repayment plan in a Chapter 13 case.

 

Many people or other parties could find themselves in this situation. Almost anyone can sign as a personal guarantor including friends and family, businesses, or other parties with good financial standings. Personal guarantors help borrowers receive loans, reduce interest rates, and get better financing options overall.

 

If you’ve been asked to sign as a personal guarantor, it’s important to take several things into account about the primary borrower’s and your current and future financial situations. Take into consideration if your credit score will be affected and how and why the bank is requiring a guarantor.  Also, consider if you have the funds to repay the debt if the primary borrower defaults, what might happen to your credit if the primary borrower defaults, and your relationship with the primary borrower.

 

If you feel comfortable signing as a personal guarantor after taking into account your options and situation, remember that you can most likely discharge that debt if needed through a bankruptcy proceeding. To learn more about personal guarantees and how to receive debt relief in Fairmont, MN through bankruptcy, contact Behm Law Group, Ltd. today at (507) 387-7200 or stephen@mankatobankruptcy.com

Understanding Co-debtor Roles in Bankruptcy

When an individual is in a financial situation ripe to be resolved with a bankruptcy case, it’s likely they have a lot of debt they can’t repay and may even have one or more co-debtors. Debt accumulation over time usually shows a bread crumb trail of having to take on more debt to cover debts already owed. For instance, many debtors open new lines of credit to pay off an auto loan or a mortgage, and that tends to snowball into more credit card debt with interest rates quickly increasing the amount owed.

If your debt has become overwhelming, Behm Law Group, Ltd. can guide and protect you throughout the process of individual consumer bankruptcy in St. Peter, MN.

Bankruptcy can be a complex legal process, and it can be very different from case to case. The bankruptcy code has many specific rules that may or may not apply depending on individual financial circumstances. One example of this is the co-debtor role and the laws that apply to this in a bankruptcy case.

 

What Happens in Bankruptcy

There are two exactly opposite things that happen to a co-debtor depending on which chapter you file. In Chapter 7, you may have the debt discharged, but the co-debtor will still be responsible for repaying the full debt. However, in Chapter 13, you assume responsibility for the debt in a three- to five-year repayment plan, and thus your co-debtor may only be partially obligated on it.   For instance, if you have a $5,000.00 Discover credit card debt and only $3,000.00 of it is paid through your chapter 13 plan, the co-debtor would be liable to pay the remaining $2,000.00.

 

Who Is a Co-debtor?

Any person that has legally agreed to pay the debt owed in the event that you can’t repay it is a co-debtor. Co-debtors include:

    • Spouse: Even if your spouse is not filing for joint bankruptcy with you, they can be responsible for the debt if they signed the lending paperwork. Common examples of this are mortgages, credit cards, and car loans.

 

    • Co-signer: If your relative, friend, or other individual co-signs a loan, rental, or other borrowed value with you, they become your co-debtor if you default on repaying that debt. This commonly happens if you don’t have sufficient credit or a lengthy borrowing history to take out a loan, rent a property, or open an account.

 

    • Personal Guarantor: If you provided a personal guarantee to a lender on behalf of a small business or a start-up, you are considered a co-debtor for the loan that the business receives. If the business files for bankruptcy, you may still be liable for that debt.

 

  • Community Property State Resident: If you and your spouse lived in a community property state in the eight years prior to filing for bankruptcy, your spouse is your co-debtor even if they don’t file a joint petition. Community property states include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.

 

To learn more about your co-debtor’s roles or to start filing for bankruptcy in St. Peter, MN, contact Behm Law Group, Ltd. today at (507) 387-7200 or stephen@mankatobankruptcy.com.

How a Bankruptcy Insider Affects Debt Relief

Bankruptcy is a legal process that provides debt relief to thousands of individuals and businesses across the United States. If you’re struggling to meet debt payments each month and you feel like your quality of life is significantly affected by this, it may be beneficial for you to consider filing for bankruptcy. Not only does bankruptcy discharge common debts like credit cards and medical bills, it also addresses debts that are tied to properties, including mortgages and car loans. This means some of the most common debt types in America are resolved with a bankruptcy case. If you want to receive debt relief in Redwood Falls, MN, through bankruptcy, Behm Law Group Ltd. can guide you through the system, help you build a strong case, and protect you in the nuanced system of bankruptcy.

 

For the typical individual consumer, there are two types of bankruptcy that can provide debt relief in different ways: Chapter 7 or Chapter 13.

 

Chapter 7 is more suited to people with low incomes who will not be able to repay their debts. It works to liquidate non-exempt assets in exchange for discharge of one’s debts. For example, the trustee administering your case may sell a snowmobile that you may not be able to protect with your bankruptcy exemptions and pay that value to your unsecured creditors.  This is the exception, however, rather than the rule.  However, the bankruptcy exemptions are quite generous.  In the vast majority of chapter 7 cases, one’s bankruptcy exemptions will be sufficient to protect all of one’s assets.

 

Chapter 13 is best for those who don’t want non-exempt assets liquidated and have a steady, stable income. This filing works to restructure or reorganize the filer’s debts into a three- to five-year long repayment plan. Secured debts (debts tied to a property) will be repaid over that time but they are usually repaid under adjusted terms that are more favorable than the original loan terms.  Unsecured debts will be paid only a percentage of what they were owed before the bankruptcy case was filed.

 

When you file for bankruptcy, people and agencies considered “bankruptcy insiders” are taken into account and may affect your case. Bankruptcy insiders include relatives, friends, partners, partner’s relatives, or a company in which the filer has some control/involvement, or business individuals such as directors, business partners, or other business individuals who have a special or close relationship the filer in some way.

 

The court considers bankruptcy insiders in the determination of preferential payments and fraud. For example, if the debtor owed his or her mother $1,000.00 and paid the mother off within one year before he or she filed for bankruptcy relief, the bankruptcy trustee administering the bankruptcy case could demand that the mother pay the $1,000.00 back to the trustee.  The trustee would then divide that $1,000.00 among all of the debtor’s unsecured creditors.  Additionally, if the filer sold some property at below market value to the insider before filing, the entire transaction could be undone or reversed by the bankruptcy trustee.  For instance, if a filer sold a vehicle that was worth $10,000.00 to his or her mother for $1,000.00, the bankruptcy trustee could undo or reverse the transaction because fair value was not given for the vehicle.  The trustee could demand that the vehicle be turned over.  The trustee could then sell the vehicle for fair market value.  The trustee would then divide up the sale proceeds among the filer’s unsecured creditors.

 

To start your bankruptcy process today and receive debt relief in Redwood Falls, MN, or to learn more about bankruptcy insiders, contact Behm Law Group Ltd. at (507) 387-7200 or stephen@mankatobankruptcy.com.

Why the 180-Day Inheritance Rule in Chapter 7 Bankruptcy Exists

One common misconception about bankruptcy is the idea that it will leave the filer with little to their name and damage their credit beyond repair. In reality, bankruptcy is an extremely helpful process for ridding individuals and businesses of debts they would otherwise not be able to repay.

 

Bankruptcy is a legal process administered through the bankruptcy court system. While bankruptcy does affect the filer’s credit and some could lose certain non-exempt properties in liquidation-type bankruptcies, the overall benefits can greatly outweigh the negatives. If you are considering filing for Chapter 13 or Chapter 7 bankruptcy in Jackson, MN, Behm Law Group, Ltd. can help you build a strong, successful case.

 

If you qualify for Chapter 7 bankruptcy by passing the Minnesota Means Test, you will have the majority of your debts discharged. The majority of common debts like credit card debt, medical bills, mortgages, and car loans are discharged in Chapter 7. When it comes to unsecured debts (debts not tied to a property/collateral), the discharge has no side effects. On the other hand, the discharge of secured debts may mean you’ll lose the property tied to that debt in the liquidation process if there is no equity or value in excess of the debt against the property that you can assert an exemption claim to. Exemptions protect important properties like your home, vehicle, furniture, etc.

 

Some properties that are only established as a money value, such as your retirement fund, trust fund, or an inheritance, may also be subject to the liquidation process, though there are generous exemptions for tax qualified retirement accounts such as an IRA, 401(k), 403(b), etc.  For inheritances in particular, such as those received through a will or a life insurance policy, there are special rules in place to prevent bankruptcy abuse and maximize the potential benefit/return to one’s creditors:

 

  • If your relative is still alive, your inheritance is safe from the liquidation process because you don’t own it yet.
  • If you received your inheritance more than 180 days after the date you filed your petition – meaning your relative passed away more than 180 days after the date you filed your case – it’s not considered part of your estate and it will be safe from liquidation.
  • If you receive your inheritance within 180 days of filing for bankruptcy (specifically, your relative passed away within 180 days after you filed your bankruptcy case), your case may be amended, and any inheritance could be at risk of being liquidated.  If you cannot use your available bankruptcy exemptions to protect some of the inheritance, whatever amount is not exempted will be liquidated by the bankruptcy trustee and paid over to your creditors.

 

This 180-day inheritance rule was established to prevent debtors from filing for bankruptcy to rid themselves of debt with the knowledge that they will soon receive a large sum from the death of a family member. Filing for Chapter 7 bankruptcy with that knowledge shows that you wanted a way around repaying your debts honestly with the money gained from your inheritance.

 

To learn more about inheritances or other assets and what happens to them when you file for Chapter 7 bankruptcy in Jackson, MN, contact Behm Law Group, Ltd. today at (507) 387-7200 or via email at stephen@mankatobankruptcy.com.

Understanding Proof of Claim in Bankruptcy as a Filer or Creditor

Whether you’re a debtor filing a bankruptcy petition or a lender involved in a bankruptcy case as a creditor, you have certain responsibilities. Bankruptcy is a highly complex legal process that requires comprehensive paperwork from all parties involved. If you’re considering filing for bankruptcy relief, Behm Law Group, Ltd. can help you put together a strong petition that provides long-term debt relief from Chapter 7, 13, or 12.

 

As a debtor, bankruptcy can be key in resolving debts in an effective way, and as a creditor, it means you’ll see a return of what’s owed when that might not otherwise be the case. Creditors involved in a bankruptcy in New Ulm, MN are responsible for filing a proof of claim if they want to receive any return on the debt the filer owes.

 

A proof of claim is a key part of the bankruptcy process. All creditors, unsecured or secured, must file the correct paperwork that shows proof of their claim on the debt in order to be paid from the bankruptcy case. Creditors are paid from the liquidation of the filer’s non-exempt assets in a Chapter 7 case, and in both Chapter 13 and 12 cases, that money comes from the filer through payments made pursuant to a repayment plan.

 

Occasionally, creditors won’t be required to fill out a proof of claim form if the filer has a no-asset Chapter 7 case. This means there’s no money in the bankruptcy estate, and none of the creditors involved will receive a return on the debts owed.

 

Proofs of claim must be filed within 70 days of the date the petition was filed for non-government creditors. Government creditors have 180 days to file their proof of claim paperwork.

 

Formal proofs of claim include the name and case number of the filer, creditor information and mailing address, amount owed to the creditor, the basis of the claim, and whether the debt is secured or unsecured. Supporting documentation from the creditor’s records is also required.

 

In some cases, another party of interest (person or entity that might gain or lose from the case) can object to a creditor’s proof of claim. Reasons a claim may be objected to include inaccuracies such as an incorrect amount listing, the wrong type of debt is listed, the supporting documents were not included, or the interest is listed incorrectly.

 

If you’re considering filing for bankruptcy in New Ulm, MN, Behm Law Group, Ltd. can help. Contact us today at (507) 387-7200 or via email at stephen@mankatobankruptcy.com for more information.

Reopening Your Case with the Help of a Bankruptcy Attorney in Mankato, MN

If you recently filed a bankruptcy case and before you could receive a discharge or reorganization of your debts, your case was dismissed, don’t give up yet. There may be a chance you can reopen your case and successfully file for bankruptcy. Because there are many reasons why your bankruptcy case might be closed before it affects any of your debts, it’s highly advantageous to have the help and protection of a certified legal professional from the start. Whether you’ve filed and had your case closed or you are just considering bankruptcy as an option, Behm Law Group Ltd. can provide the guidance and advice you need from an expert bankruptcy attorney in Mankato, MN.

 

Cases are often closed due to an issue in the pre-bankruptcy requirements or in the paperwork you completed. Bankruptcy paperwork can be complex, and the pre-bankruptcy requirements are mandatory and can be rigorous. That’s why a case closure is frequently due to a failure to satisfy a court requirement.

 

Failure to:

  1. List an asset: If you neglected (accidentally or otherwise) to list an asset/property on the initial documents you are required to complete in your bankruptcy case, your case can be dismissed. However, if your case is originally dismissed due to your lack of accurate asset listing, you can reopen your case with the corrected paperwork. The guidance of a bankruptcy attorney is often key in filling out bankruptcy documents regarding assets.
  2. List a creditor: Even if a creditor will not be involved in the bankruptcy process in any way, you are required to list all the parties to whom you owe money. This includes lending companies, landlords, the court system, the government, and even friends and family. If you fail to list a creditor, chances are you can reopen your case with adjusted documents and direction from a bankruptcy attorney about the details of your creditors.
  3. Complete credit counseling: Every filer has to attend court-approved credit counseling sessions within 180 days before submitting a bankruptcy petition. Without the advice of a bankruptcy attorney, it can be difficult to find an approved counseling provider or to understand when a provider might take advantage of your situation. If your case was dismissed because you failed to complete credit counseling, you can reopen your case if you prove you’ve satisfied that pre-bankruptcy requirement.

 

To reopen you case, you simply have to correct anything you failed to do and submit an application that explains why you want to reopen your case. With that application, you also need to submit documentation that proves you have remedied any failures in the original submission. To learn more about reopening a case and why the help of a bankruptcy attorney in Mankato, MN, is important, contact Behm Law Group Ltd. at (507) 387-7200 or via email at stephen@mankatobankruptcy.com today.

Overview of Some Bankruptcy Statistics since 2005

In 2005, the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) became law in response to the rapid spike in individual consumer bankruptcies. The difficult economy of the early 2000s pushed many people into serious debt, and filing for bankruptcy was the best option available to them for long-term debt relief. However, it also created a situation in which bankruptcy fraud became more prevalent. To counteract this, the BAPCPA was passed, but since then, a lot has changed in the U.S. economy. If you’re considering filing for bankruptcy relief in Marshall, MN, Behm Law Group Ltd. can help you navigate the BAPCPA and other bankruptcy laws to build a strong, successful Chapter 7, Chapter 12, or Chapter 13 case.

 

After the BAPCPA was passed in 2005, the bankruptcy numbers changed dramatically. There was a decline in the number of Chapter 7 cases filed because the act created more strict requirements to qualify for Chapter 7 bankruptcy relief. From 2005 to 2017, 12.8 million consumer bankruptcies were filed, with an average of 68% Chapter 7 cases and 32% Chapter 13 cases. Even with the passage of the BAPCPA, the ratio of Chapter 7 to Chapter 13 is still high.

 

In 2008, the crashed economy sent more people into bankruptcy, and by 2010, the United States saw the highest filing of bankruptcy cases since before the passage of the BAPCPA. The total number of consumer bankruptcies filed in 2010 was 1,538,033 with 1,105,534 Chapter 7 cases and 430,583 Chapter 13 cases. By 2017, as the economy stabilized, the total of consumer bankruptcies was 767,721 with 61.50% Chapter 7 cases and 38.36% Chapter 13 cases. In comparison, the 2005 total of consumer bankruptcies was more than 2 million nationwide.

 

Georgia, Alabama, and Louisiana filed the highest percentage of consumer bankruptcies from 2006 to 2017, likely due in part to the devastation caused by Hurricane Katrina in 2005. Between 2006 and 2017, 92% of the 25 states contributing the most to the total of national consumer bankruptcies were southern states.

 

In 2011, however, California filers made up 17% of the national consumer bankruptcy filings.  In contrast, Alaska had less than 1,000 filings that same year. In 2016, Alabama had as many as 1 in 112 households filing for Chapter 13 bankruptcy.

 

The most common causes of consumer bankruptcy reported in 2005 included medical bills and credit card debt as significant factors. Since then, the causes of bankruptcy have expanded in variety, including job loss, income reduction, unexpected expenses, and divorce. The average filer today is middle-aged, married, and making less than $30,000 a year.

 

The changes in bankruptcy statistics since the establishment of the BAPCPA in 2005 have manifested in many different ways, including rates of bankruptcy, types of bankruptcy, and circumstances of the filer.

 

To learn more about bankruptcy in Marshall, MN, contact Behm Law Group Ltd. at (507) 387-7200 or at stephen@mankatobankruptcy.com today.