Tuesday, November 9, 2010

Chapter 7 on the Rise

The Bankruptcy Abuse Prevention and Consumer Protection Act of five years ago made it harder for individuals to receive Chapter 7 bankruptcy protection, in part by increasing the costs associated with filing. Chapter 7 is designed to give individual debtors a "fresh financial start" by liquidating assets and discharging debts.

In fiscal 2010, Chapter 7 filings spiked nearly 15% to over 1.1 million, from 989,227 in fiscal 2009. Chapter 13 filings, in which debtors are typically required to repay debts according to a budget plan that the court sets up, rose 9.2% in the year. Chapter 11 filings fell 3.8%.

Meanwhile, business filings decreased slightly in fiscal 2010, according to the Courts. Bankruptcies filed by a corporation or partnership totaled 58,322, down 0.7% from the 58,721 business filings in 2009.