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US Court System: 2010 chapter 13 filings up for fifth straight year

The news is replete with opinions from economists and experts who say the nation is continuing toward recovery. The news has been reported since experts proclaimed the end of the recession sometime last year. News stories regarding employment, however, are not as rosy as unemployment remains high in Ohio and across the country.

Cincinnati bankruptcy attorneys are well aware that many residents continue to struggle with the monthly bills. Experts have indicated that a recent lull in the foreclosure crisis, mainly attributed to a moratorium, may not mean the foreclosure rate is ready to decline.

The United States Court System says that in 2010, Americans filing bankruptcy under chapter 13 increased for the fifth consecutive year. Last year saw approximately 439,000 Chapter 13 bankruptcies, which is an 8 percent increase from the 407,000 filed in 2009.

The changes in the bankruptcy code in 2005 were meant to steer more people into chapter 13. However, many distressed homeowners opt to proceed under chapter 13 to stave off a foreclosure. Homeowners are permitted to maintain possession of their home and keep cars and similar assets while they undergo a court-monitored financial restructuring and debt repayment program.

Filing for bankruptcy places an automatic stay on all efforts to collect on debts. A chapter 13 plan, in appropriate cases, can provide a distressed homeowner with the opportunity to cure mortgage arrearages over the course of the chapter 13 proceeding.

In 2010, chapter 13 bankruptcy filings were the highest in states with difficult real estate markets and high foreclosure rates.

Although there were a record number of Chapter 13 bankruptcies in 2010, even more people filed for Chapter 7, which liquidates a filer's non-exempt assets with the goal of giving the individual a fresh start. There were approximately 1.1 million Chapter 7 bankruptcies filed in 2010.

Source: Housing Wire, "Chapter 13 bankruptcy filings up 8% in 2010," Christine Ricciardi 15 Feb 2011

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