Chapter 13

Bankruptcy: All Over the News

It isn’t just major and minor retailers that are filling the headlines with news of pending or active bankruptcy protection filings – celebrities, towns and entire states are talking about the possible benefit of filing for bankruptcy protection.  With so many individuals, companies and organizations initiating a bankruptcy filing in order to clear up their financial troubles it’s only natural to feel as though filing for bankruptcy may be the best route for you to follow in order to get out of your financial troubles.

In reality though every person’s and business’ financial difficulties are unique and just because others who have had financial issues reminiscent to yours have repaid their creditors or absolved their debt with the help of bankruptcy it doesn’t necessarily mean that bankruptcy is the correct choice for you.  If you are having financial problems you should reach out to an experienced Colorado bankruptcy attorney in order to determine the most suitable course of action for your situation.

A Colorado bankruptcy attorney will closely evaluate your level of personal or business debt in an effort to find all of the potential relief options available to someone in your situation.  By providing you with a wealth of information on a number of different debt relief options your Colorado bankruptcy attorney can help you find the single best option for your unique financial situation.  With the help of a Colorado bankruptcy attorney you can feel confident that you are embarking on the right path toward debt relief and that your financial problems will soon be resolved with as few headaches as possible.

Colorado business bankruptcy rate lowest in four years: will it last?

2010 appears to have been a very good year for Colorado businesses. The Associated Press reports that the first year of the new decade brought a fall in the number of Colorado businesses filing for bankruptcy. This news makes 2010 the first year bankruptcy filings have decreased in the state since 2006.

The information behind this report comes from Colorado’s US Bankruptcy Court, which analyzes bankruptcy statistics throughout state. The Bankruptcy Court claims that filings fell almost 4 percent between 2009 and 2010. However, other data gathered by the organization suggest that this data may be presenting a false picture of the financial health of Colorado businesses.

Court records found that, even as the number of business bankruptcies decreased, the number of personal bankruptcy filings increased over 17 percent in 2010. Experts point to persistent unemployment and a weak housing market as factors behind this spike, both of which are indicators that the Colorado economy remains fragile.

The Bankruptcy Court also discovered that many small-business owners are choosing to file for Chapter 13 bankruptcy as opposed to Chapters 11 or 7, a fact which may have skewed their findings. Similar to Chapter 11 bankruptcy, Chapter 13 gives a small-business owner the chance to restructure their debt under a new repayment plan. Chapter 13 bankruptcy cases actually rose 26 percent over the course of 2010, even as the number of other forms of bankruptcy decreased.

Furthermore, some bankruptcy experts believe that the decline in business bankruptcies is only a temporary trend, especially after the recent failures of two of Colorado’s biggest commercial banks: United Western and FirsTier.

Considering all these factors, even businesses who felt financial stable at the close of 2010 may find themselves struggling with debt payment in 2011. Business owners who are considering bankruptcy should contact an attorney who can help them best protect their interests.

Source: Victoria Advocate. “Business bankruptcy filings fall in Colorado.” 13 February 2011.

Bankruptcy Filings Rose 9 Percent in 2010, Experts Predict Reduction in 2011

Personal bankruptcy filings in 2010 hit one of the highest recorded numbers; approximately 1.53 million people filed for bankruptcy this past year, a 9 percent increase from the previous year. While 9 percent is the nationwide average, some areas of the country, mostly situated in the southwest and southeast, experienced a 24 or 25 percent increase. The bankruptcy rate for 2010 was the highest it has been since the restructuring of the law in 2005.

The bankruptcy revision was structured in a way that legislators hoped would reduce the amount of debt forgiven in the process. Law makers hoped that the revision would force more people to choose filing under Chapter 13, a process that encourages workouts and new repayment plans instead of Chapter 7 where debtors forfeit their assets. According to the American Bankruptcy Institute, only one third of debtors chose to file under Chapter 13.

According to surveys conducted by the nonprofit Institute of Financial Literacy, there has been an increase in the amount of middle-class families making over $60,000 per year or have obtained college degrees who have filed for bankruptcy.

Experts have predicted a reduction in 2011 of the number of personal bankruptcy filings. The prediction is based upon the tightened lending procedures and the fact that people simply are not borrowing right now. “[When] borrowing’s down,” said one law professor, “there’s less of a reason for people to take the legal step of filing for bankruptcy.”

As we discussed in our prior post, other changes to the Chapter 7 filing procedures could also have an effect on the number of personal bankruptcies filed in 2011.

Source: The Wall Street Journal “Bankruptcy Filing Leapt 9% Last Year” Sara Murray1/4/11