Bankruptcy filings are down but they will rise after October 2013 when people realize that they can file again
June 19, 2013 1 Comment
Bankruptcy filings are down significantly across America. I wrote about this in a previous blog. Some areas have seen a drop-off of as much as 50% in the numbers of filings. There are many reasons for this. One reason is that most homes that were in foreclosure after the recession began have now been dealt with one way or another. Household debt is also down and household debt has always been an indicator of how many bankruptcies will be filed.
Some economists believe that there will be another wave of foreclosures that the banks have been holding off foreclosing until there are signs of an economic recovery. But there is another factor out there that will hit this October. In October 2005 millions of Americans filed for bankruptcy in order to get their filing done prior to the 2005 bankruptcy law change.
Bankruptcy underwent a major change in 2005 designed to make it harder for debtors to file a chapter 7. As it turned out most people could still file even with the new “means test” that was added in the new law. But the 2005 bankruptcy law change scared people into thinking that bankruptcy was not going to be an option so they had better file now.
So millions did and many of them probably should not have. But after 2005 the country went through a major recession. Jobs were lost, foreclosures were up, and debts could not be paid. But one aspect of the new law was to increase the time between bankruptcy filings from seven years to eight years.
We are now about to reach the eight year mark in October 2013. This means that if you filed bankruptcy before the law change in 2005 (and maybe didn’t need to) you can file again in October of this year (2013). It is now okay for you to file again so if you need to contact an attorney about filing a second time. Don’t worry about having to do it it’s okay. No one could foresee the terrible recession of 2008 and it probably has left you will a lot of debt that you have not been able to pay. Bankruptcy will again take care of this debt once and for all giving you a fresh start.
I am a San Diego bankruptcy attorney. For further questions please visit my website at www.farquharlaw.com. Or call my office for a free consultation or for any other advice about bankruptcy or debt at (619) 702-5015. Call now for free credit report and analysis!
For a free e-book on “13 things to do to prepare for your bankruptcy filing” please e-mail me at firstname.lastname@example.org.
Bankruptcy photo courtesy of Stockmonkeys.com. Courthouse photo courtesy of Robert Linder.