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ABI: Bankruptcies drop eight percent during first nine months of 2011

Economic statistics come in all forms. Since the economic crunch hit the nation's economy, the news has been full of stories showing ups here and downs there. Recently, the American Bankruptcy Institute announced that the number of bankruptcy cases filed nationwide fell slightly during the first nine months of this year.

Cincinnati bankruptcy lawyers know that most Ohio residents who are facing overwhelming debt put off considering filing for bankruptcy protection in the hopes that circumstances will change. That is common all across the country. In the height of the foreclosure crisis many people may have decided to seek out advice from a bankruptcy lawyer to learn how a bankruptcy petition can stop the mortgage foreclosure. This blog reported last week that delinquencies on mortgages are back on the rise for the first time in two years.

The latest numbers show that overall bankruptcy petitions across the United States fell eight percent between January and September of this year, when compared to the number filed in the same time frame of 2010. However, the statistics also shows that roughly 1.47 million bankruptcy cases were opened in federal bankruptcy court in the first nine months of this year.

The ABI says the majority of the overall bankruptcy cases were personal bankruptcies, with over 1 million Americans seeking consumer bankruptcy relief during the first nine months of the year. The most common types of personal bankruptcy are under chapter 7 or chapter 13.

A chapter 7 bankruptcy is what most people consider as a "traditional" bankruptcy. It is basically a liquidation bankruptcy. The laws provide an Ohio resident with certain exemptions that are unavailable to creditors. Many people who qualify for a chapter 7 bankruptcy can actually keep most, or all, of their personal property in a chapter 7 bankruptcy case.

A chapter 13 bankruptcy is commonly referred to as the "wage earner" bankruptcy. The 2005 bankruptcy law added a "means test" for people considering bankruptcy that requires certain individuals to participate in the chapter 13 program. An experienced bankruptcy attorney can explain how the means test works in an individual situation. But some individuals who have non-exempt personal property that they wish to keep may choose chapter 13 over chapter 7, even if they qualify for chapter 7 under the means test.

The laws are somewhat complicated. Speaking with an experienced lawyer can help an individual may an informed decision about whether bankruptcy protection is the right choice to find meaningful debt relief in an individual situation.

Source: Bloomberg Businessweek "Bankruptcies Fall 8% in Fiscal 2011 on Lower Debt, ABI Says" Nov. 8, 2011

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