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Data shows bankruptcy filings down in first half of year

The latest report from the American Bankruptcy Institute suggests Americans are paying down their debt. Some experts say there is an overall pull back in the consumer debt industry. Tuesday the ABI announced that United States consumer bankruptcies have showed a decline this year from the numbers posted in the first six months of 2010.

While the overall economy in the Cincinnati area has shown potentially marginal improvement in recent months, a number of people continue to seek the protection of the bankruptcy code. The ABI says during the first six months of this year the number of Americans filing for consumer bankruptcy has dropped by 8 percent when compared to last year. In June, the number of bankruptcy filings nationwide rose by 4 percent over the number of filings posted in May 2011. However, the June number is roughly a 5 percent decrease from June, 2010.

The ABI says 709,303 individuals have sought debt relief under the bankruptcy code during the first half of this year. More than 770,000 Americans filed for bankruptcy during the same time frame last year. In 2010, the number of people filing for bankruptcy set a high water mark since the bankruptcy code was given an overhaul in 2005.

The vast majority of bankruptcy cases continue to be filed under chapter 7. In June, 2011, the number of bankruptcy cases filed under chapter 13 was 28 percent of all cases. Most cases are filed under chapters 7, 13 or chapter 11 in U.S. bankruptcy courts.

Chapter 7 bankruptcy offers consumers who can no longer service their high debt loads to seek a fresh start through liquidation of non-exempt property, if any exists in an individual case, with unsecured debt discharged at the conclusion of the bankruptcy proceeding.

Chapter 13 bankruptcy offers consumers with a steady income to create a payment plan over a three to five year period to restructure debts.

Source: Consumer Affairs, "Consumer Bankruptcies Fall In First Half Of Year," Mark Huffman 5 Jul 2011

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