The Bankruptcy Filing Numbers Down, Bad News for a Bankruptcy Attorney

Recently, the bankruptcy filing rate came out and it shows that less Americans are filing for bankruptcy to eliminate their debt. According to the bankruptcy filing data, the number of Americans filing bankruptcy dropped from the same period last year ending September 30, 2012. The greatest decrease was those filing Chapter 7 bankruptcy which declined around 15%. The number of Chapter 13 bankruptcy filings also declined 10%. In 2010 the US saw a record number 1.6 million people filing bankruptcy for numerous reasons. In 2011, the decline began dropping the rate to 1.47 million bankruptcies and now it has further declined to 1,261,140. While this sounds like good news for the economy, it seems like bad news for a bankruptcy attorney.

Typically, the majority of people file Chapter 7 bankruptcy over all the other chapters. Because of the bankruptcy code changes back in 2005 and the real estate bubble bursting in 2007, we've seen an increase of Chapter 13 bankruptcy filings. Even though we had a slight decline last year, this is still way more than there has been historically. Many experts are wondering what in the world is going on. Unemployment is now a stated 7.7% which is low compared to the 8 to 9% it's been for the last four years. The Federal Reserve has been quick to respond to the economic woes the US has had since 2007 with QE1, QE2, The Twist, QE3 and now QE4. All of these are nothing more than quantitative easing which in a nutshell is printing money to buy our way out of debt. In September, QE3 was announced with a reported $40 billion a month being printed to buy mortgage backed securities. All quantitative easing programs previously had a timeframe, but this one is to infinity and beyond. When everyone thought this was crazy, last week came QE4 for an additional $45 billion a month for the same reason. Once again there was no endpoint except the statement by Mr. Bernanke where he said that the Federal Reserve would continue the quantitative easing until the unemployment numbers dropped to 6.5% or below.

Historically, quantitative easing has not worked for any country that used it to get out of financial trouble. Did it work for the Weimar Republic when it tried it from 1919 to 1923? Nope, and it won't work here either. These monetary policies are nothing more than kicking the can down the road where at some point in time the taxpayers will end up footing the bill. The scary part is the repayment cost usually comes through hyperinflation and higher taxes, nothing like stabbing a stake through the heart of an already fragile economy. The more money that is printed, the less the currency is worth. Considering all the facts, even though the bankruptcy filing numbers have declined, I think it's a matter of time before new records will be set. I don't think a bankruptcy attorney is really that worried about their career choice. In the next few years, we will probably see an increase in Americans losing their homes to foreclosure and many of them will have to file bankruptcy also. The young adults currently going to law school should consider becoming a bankruptcy attorney because the way the economy looks, their future would look bright.

The author started DebtFreeBankruptcyAttorney.Com which is a website that helps individuals with debt problems by putting them in touch with a local bankruptcy attorney that specializes in filing bankruptcy under Chapter 7 and Chapter 13 bankruptcy. Check our website for more answers to bankruptcy questions and ideas on how to have a debt free future.

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Chapter 7 Liquidation Bankruptcy Vs Chapter 13 Reorganization Bankruptcy

Chapter 7 Liquidation Bankruptcy

Chapter 7 is named 'Liquidation Bankruptcy' because a trustee is appointed to collect and reduce to money any non-exempt assets for the benefit of priority and unsecured creditors of the estate.

Over 90% of all Consumer Chapter 7 filings are declared 'non-asset cases' because few consumers filing Chapter 7 have assets that exceed any amount that can be protected. Chapter 7 is the simplest, quickest, least expensive and easiest way to discharge 'unsecured' debt.

Debt owed to 'secured creditors' are generally discharged but the secured creditors contractual rights to their 'security' usually remains unaffected. So they must be financially satisfied to prevent them from pursuing their rights to the security after the bankruptcy case is concluded... usually 3 to 5 months after the case was filed.

While Chapter 7 discharges most all General Unsecured obligations, it does not discharge: most tax obligations, debts owed as a result of a Domestic Support Obligation, Student Loans, Fines and some other less common obligations.

It should be understood that in order to receive the benefits of a Chapter 7 bankruptcy the law now requires anyone earning more than their States Median Income to prove they're unable to repay at least 25% of, or $10,000 to, their General Unsecured Creditors over a 5 year period ($167 monthly). However, some skilled bankruptcy attorneys have been able to successfully challenge the 'systems' presumptive position in that regard which has allowed some of their over Median Income clients to still receive the benefits of a Chapter 7 discharge.

You should also understand that it's not unusual for someone to file Chapter 13 and actually pay less per month or even pay less in total to their creditors than what they would have paid had they filed a Chapter 7.

Because Chapter 7 may not be available or because that availability may need to be skillfully challenged and because a Chapter 13 may be more advantageous, it's important to have your financial affairs reviewed by, and for you to be represented by, a consumer bankruptcy specialist highly skilled with Chapter 7 and Chapter 13 matters.

Chapter 13 Reorganization Bankruptcy

Chapter 13 bankruptcy restructures and discharges debt based on a consumers ability to repay over a period of at least 36 months and usually 60 months. Most Chapter 13 Plans primarily call for the repayment of secured and priority creditors and leave little, if anything, available to pay unsecured creditors. It's not unusual for a person filing Chapter 13 to pay less per month and or pay less in total to their creditors than they would have, had they filed a Chapter 7 Liquidation Bankruptcy.

That's because Chapter 7 doesn't have much effect on Secured and Priority creditors while Chapter 13 can restructure those creditors which have a shorter repayment period remaining than the length of the proposed Chapter 13 Plan. This 'restructuring' can modify the rights and status of secured and priority creditors.

As an example the filing of a Chapter 13 can remove a totally unsecured junior (2nd or 3rd) mortgage from their secured position on the real estate and treat it as they truly are... "unsecured". Chapter 13 also can stop foreclosures and design a Plan to cure the mortgage delinquency over the life of the Plan... without allowing future interest on the delinquent amount.

Chapter 13 also stops future interest on outstanding priority tax obligations and can provide up-to 5 years to repay those taxes. It can also reduce interest rates on consumer secured obligations like vehicle contracts when they're in excess of the current prime rate of interest plus 2 or 3 percent.

In some instances, depending on when the debt was made, vehicle contracts and other contracts secured by consumer goods can be treated as partially secured and partially unsecured when the value of the security is worth less than what's owed.

These features are generally not available to someone filing Chapter 7 bankruptcy.

While Chapter 13 can often be more advantageous than a Chapter 7 you must be careful to find and select an attorney willing to file and able to skillfully file, Chapter 13's. Not all bankruptcy attorneys will file them and some of those who do, don't provide the level of expertise needed to take the greatest advantage of the special provisions available.

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Do-It-Yourself Bankruptcy Vs A Bankruptcy Attorney

When someone is considering filing bankruptcy there are a lot of things to take into account. First of all what chapter of bankruptcy do they file? Is filing bankruptcy even the right decision for them and their financial situation? Should they file bankruptcy on their own using a document preparation service or hire a bankruptcy attorney? These are all very complicated questions that must be addressed prior to making a final decision.

First of all, you can file a do-it-yourself bankruptcy if you already know the chapter of bankruptcy you need to file. The Internet has a wealth of information regarding bankruptcy and can be a good place to begin. An individual must be cautious to seek information from reputable websites that offer up to date information since bankruptcy laws can change. Bankruptcy laws also vary from state to state so the individual must make sure that they take that into consideration as well. A good place to look is your local bankruptcy court website for accurate information. You can even download for free a bankruptcy petition that you can fill out and submit to the court to file on your own. The problem with this is that filing bankruptcy has become more complicated with the addition of the 2005 bankruptcy code changes. A person must first qualify to file, they must also submit all of the proper financial documentation to the court at the time of filing, as well as submit a copy of the course completion certificate for the credit counseling class that is now required by the court. If any information is not in order or the petition appears to be incomplete the court will not accept the petition. If the bankruptcy petition is filled out incorrectly, the debtor will not be told how to fill it out correctly but sent away to seek legal assistance to correct the problems. If on the other hand, the debtor has a simple Chapter 7 Bankruptcy case with few assets, filing a do-it -yourself bankruptcy can be achieved fairly easily with a little time and research.

An individual can also use a document preparation service to help file bankruptcy. Reputable services can be found online and only charge a fraction of what a bankruptcy attorney would cost. This can be a huge savings for an already cash strapped debtor. The thing to keep in mind about these services is that they only assist in filling out the bankruptcy petition correctly. They cannot give the debtor any legal advice at all regarding which exemption laws to use to protect personal assets. They also cannot file the bankruptcy petition with the court. If the debtor has a pretty straight forward uncomplicated case, a document preparation service can benefit them.

Lastly, you can seek the services of a bankruptcy attorney. This is the most expensive option available, however, when you take into consideration the amount of debt that you will be discharging in the bankruptcy filing then it is really not so bad. A bankruptcy attorney will be available to answer all of your legal questions, and will be there from start to finish to walk you through the process. They file the petition for you at the courthouse as well as represent you at the required meeting of the creditors. They make sure that all of the paperwork is done correctly and that all court requirements are completed by the debtor such as the credit counseling class and financial management course. Sometimes it is worth it to pay a little more for the peace of mind that an experienced bankruptcy attorney can bring.

When it comes to something as important as filing bankruptcy and one's financial future all options must be considered to make the best choice possible for an individual and their family.

The author is a professional that formed FilingBankruptcyPros.Com which provides information for debtors considering filing bankruptcy under Chapter 7 and Chapter 13 bankruptcy and helps individuals stop foreclosure and eliminate their debt by putting them in touch with a local bankruptcy lawyer. Check our website for more answers to bankruptcy questions and ideas on how to have a debt free future.

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