Interesting Statistics On Personal Bankruptcy In The United States
The word bankruptcy is derived from the Italian words “Banca Rotta”, meaning to “bench broke”. As a result, two types of personal bankruptcy exist on the basis of the amount owed to creditors and financial abilities. Simply put, bankruptcy is referred to as a person who doesn’t have the capability or power to pay his/her debts. This act is initiated by the debtor and imposed upon by court order. In the US, bankruptcy is under the control of the Federal Government. Although it is under the jurisdiction of the federal government, state laws sometimes overrule the federal bankruptcy laws, especially in a case of who qualifies for the bankruptcy status.
The bankruptcy code of the United States includes two types of personal bankruptcy. These are the Chapter 7 and Chapter 13 types of personal bankruptcies. An individual filing for the Chapter 7 types of bankruptcy is expected to meet the requirements of the means test for eligibility. This means of eligibility enables the creditor to reacquire all the property used as collateral on the debt. There is always a limit to the type of property that can be exempted in each state.
Under the Chapter 13 bankruptcy type, the debtors are allowed to keep their assets and possessions, but a payment plan based on their income would be accepted to repay their creditors. The amount of repayment depends on the value of property, debtor’s income, debt being charged and expensesd. Often, the payment plans span between 3-5 years but the debtor can pay earlier if he’s able. This type of bankruptcy doesn’t involve repayment for medical bills and unsecured debt.
Personal Bankruptcy: The Facts And Statistics
Personal bankruptcy in the United States is a regular occurrence that many people recognize. Over the past few years, the rates of personal bankruptcy in the United States have dramatically increased. Bankruptcy filings were particularly rare between 1900-1950 (World Atlas). From 1960, however, different reasons led to the high rates of bankruptcy in the US. Between 1980-2005, this increase was even more dramatic. Bankruptcy filings reached an all-time high in 2005 when one of every 55 US homes went bankrupt (U.S. Bankruptcy filings). In 2007, the filings decreased to approximately 800,000; the lowest mark in the last 20 years. Consumers, not businesses, now filed the highest number of bankruptcies in the US. In 1990, for instance, businesses accounted for about 15 percent of bankruptcy filings while it is just 4 percent today (USIRS, 2015). It is important to emphasize that the processes involved in personal bankruptcy filings are different in each state. This is why some states record a lot of bankruptcy rates every year while others record few.
The annual rate of bankruptcies varies widely by state. This might be due to the difference in each state’s bankruptcy policies and population ratio. For example, California had the highest bankruptcy rate in 2011, with figures running to about 240,000. This alone was about 19 percent of all the bankruptcy filings recorded in the country in 2011. Because of the disparity in the population status, Alaska had fewer bankruptcy filings in the same year.
Similarly, Tennessee had the highest bankruptcies rate in 2016, running to about 610,000. Recent reports by the Securities and Exchange Commission indicated that the South reigns when it comes to the States with the highest rate of personal bankruptcy filings in the US. For the statewide filings, Tennessee had the highest rate followed by the neighboring Georgia and Alabama. In 2016, North Dakota and Alaska had low rates of 94 and 56 per 100,000 respectively, ranking them as two of the states with very low bankruptcy filings. However, some U.S. states fall between the extreme rates of 300-400 bankruptcy filings in 2016 (Bankruptcy in the United States; Osmanov, 2016).
About 355,000 people filed bankruptcy in the first quarter of 2012, this is about 12 percent down from the same period of time in the previous year according to the United States Bankruptcy Institute. A significant rate of bankruptcies is caused by the changing demographic pattern, medical debts, and unemployment. Over the years, bankruptcy experts have identified some important change in the patterns of typical bankruptcy petitioners. Today, an average filer is married and older, makes less than $30,000 a year and has a high school education.
Since the late 1990s, bankruptcy used to be filed by the older individuals. A decreasing amount of filers (younger than 25) was recorded in 2013 while more senior citizens are declaring bankruptcy. By comparison, those citizens younger than 25 were less than 2 percent of all filers in 2011, down from about 12 percent in 1996. In the same vein, the rate of bankruptcy filers aged 55 or more were doubled: the current filers come from about 20 percent of that age group. This fluctuation in the age of filers caused the average age of bankruptcy-seekers to increase from about 36-45 years old.
The Travis Law Firm provides professional legal representation for Chapter 7 & Chapter 13 bankruptcy services for residents of all cities in Riverside and San Bernardino Counties. We have offices in Riverside, San Bernardino, Victorville, Temecula, Cathedral City and Ontario for the convenience of our Inland Empire, High Desert, and Coachella Valley clients. For more information about our bankruptcy law services and other legal representation, call us today at (951) 274-9501 or (951) 274-9501.