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Bankruptcy

Never more so than in our current economic downturn have debtors needed the potential relief of bankruptcy.  Willoughby & Eckelberry guides you through the process, working towards the most favorable outcome possible for your particular situation.  We also have specialized knowledge of divorce and bankruptcy, working through both issues in an orderly manner.

 
About bankruptcy
FAQs about Chapter 7 bankruptcy
FAQs about Chapter 13 bankruptcy
US Bankruptcy District Court Counseling Requirement
Exemption Statutes
Facts about bankruptcy

Facts About Bankruptcy

General Bankruptcy

  • 8,607 bankruptcies were filed in the third quarter in Colorado in 2010.

  • A Harvard Study shows that unpaid medical bills are the top reason individuals file for bankruptcy.  The second cause is credit card debt.

  • 70% of all Americans say they are carrying so much debt it is making their home lives unhappy.

  • In 2003, more children lived through their parents' bankruptcy than divorce.

  • In 1998, one out of every 68 households in the United States filed for bankruptcy.

  • Bankruptcy filings each year in the United States are now more than double the number of filings that occurred during the entire decade of the Great Depression.

  • Consumer debt has increased an average of 8 percent annually over the last 20 years, with the average family now carrying $58,500 of debt.

  • Unsecured debt has grown by an average of 14 percent annually since 1978. The average balance of debt carried by the people who use credit cards to borrow money grew 50% from 1992 to 1995.

  • Approximately 8.6 percent of filers have declared bankruptcy once before and around 2.5 percent of bankruptcy filers have declared three or more times.

  • The average age of a person filing for bankruptcy is 38.

  • Couples filing jointly make up 44% of all bankruptcy filings.  Another 30% of the filers are women filing bankruptcy alone.  26% of the filings are men filing alone.

  • Most bankruptcy filers are slightly better educated than the general population.

  • 40% of bankruptcies result from medical crises, unemployment, or divorce.

  • The states with the highest bankruptcy rates are Tennessee, Utah, Georgia, and Alabama.

  • 90% of bankruptcy filers have at least two car payments, a house payment, and an average of $2500 in credit card debt.

  • The typical bankruptcy filer is white, married, a homeowner, works full time, with a household income of less than $30,000 but an average debt load of $47,000.

  • More than one half (50%) of bankruptcy filers are baby boomers.

  • 19% of bankruptcy filers are college students.

  • Bankruptcy filers blame credit card bills 63% of the time, mismanagement 50% of the time, pay cuts or job loss 37% of the time, and medical bills 28% of the time.

  • 43% of Americans believe bankruptcy is an acceptable and easy way to settle financial difficulties.

  • Urban areas have more personal bankruptcies than rural areas, a trend researchers say explains higher divorce rates.

Dissolution of Marriage and Bankruptcy

The following debts are not dischargeable in bankruptcy, meaning that filing bankruptcy will not likely relieve you of your responsibility to pay:

  • child support

  • alimony/spousal maintenance

  • student loans

  • most tax debt

  • some criminal fines and penalties

Bankruptcy and Small Businesses

Because many small businesses are unincorporated, the business and its owner are legally the same. This means that debts of the business are personal liabilities of the business owner. Therefore when an unincorporated business fails, its owner is liable for a mixture of business and personal debts and the relevant bankruptcy law is personal bankruptcy law.

 The new means test applies only to debtors who have “primarily consumer debts”, so that small business owners are allowed to bypass it and file under Chapter 7 as long as most of their debt is business debt. For owners of failed businesses who file under Chapter 7, the bankruptcy reform also makes it more difficult to shelter financial assets using states’ homestead exemptions.

Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005

BAPCPA also provides “domestic support obligations” first priority status over other nonsecured debt. The automatic stay provisions of the code no longer apply to divorce or support actions filed in state courts. Though you won’t be able to divide the debtor’s property, you will be able to address support, domestic violence and custody matters without having to appear in federal bankruptcy court to “lift” the stay. Under BAPCPA, a bankruptcy filing won’t affect your rights to receive support via wage garnishment or other common collection means. According to BAPCPA, no payment plan debtor will receive an order of discharge until he or she confirms that all domestic support obligations are current. BAPCPA requires a debtor to reside in a state more than 40 months before he or she files for bankruptcy protection to take advantage of that state’s exemptions; thus eliminating “forum shopping,” where debtors moved to states like Florida or Texas just before filing bankruptcy petitions, in an effort to convert nonexempt property into an exempt homestead, wiping out their nonsecured debt in the process. Under BAPCPA, you will receive notice from the trustee of your rights to collect support through federal enforcement agencies. You will also receive the most recent address of the debtor, where he works and details about other affirmed creditors remaining after the bankruptcy action. BAPCPA provides the possibility of using exempt property to collect what you are owed as a nondischarged creditor, these schedules will be a rich source of useful information.

References for Facts about Bankruptcy