Too broke for Arizona bankruptcy? Research before deciding
On behalf of Ellett Law Offices , P.C. posted in 1. Personal Bankruptcy on Monday, July 9, 2012
The number of bankruptcy filings across the country is slowly returning to pre-recession levels, but that may not be a sign that Phoenix households are out of the woods yet. According to some observers, due to legislation and economic conditions, many Americans might not have enough money to go even through the process of filing for bankruptcy to eliminate personal debt they have accumulated.
In the first six months of 2012, new bankruptcy filings across the country fell 14 percent from the previous year. And it’s projected by tracking organizations that the year will end with the lowest rate of filings since before the 2008 financial crisis.
The number of individuals seeking to file for bankruptcy has also fallen 13 percent compared to last year. Some of this is credited to low interest rates encouraging households to take on more debt than they should for their financial means. And some is attributed to other factors that a household might be unable to avoid.
The Bankruptcy Abuse Prevention Act is thought to be another one of these factors. The act was passed in 2005, and was designed to keep wealthy individuals from abusing the bankruptcy system. This act did succeed in lowering the number of bankruptcies. However, a 60 percent increase in filing costs prevented some individuals from being able to afford bankruptcy. Now, as job creation and wage increases remain low, many hurting households may be even less able to afford bankruptcy filing costs in order to eliminate the debt burdens they have accumulated.
One source of funds that appears to be being tapped as a result is tax refunds. As many as 200,000 Americans are estimated to be using their tax refunds to pay for bankruptcy filings. While this may allow Phoenix households to finally file for bankruptcy, individuals would be wise to consult with an experienced attorney to learn about the process and all that’s involved in order to take full advantage of the protection that the law provides.
Source: ibtimes.com, “Americans Too Broke To Go Bankrupt? US Bankruptcy Filings On Pace To Fall To Pre-2008 Level,” July 6, 2012
Tags: Chapter 13, Chapter 7, debt relief, personal bankruptcy