Green Shoots in the Economy - Bankruptcy Increases by 100

In another sign that the average American is becoming increasingly desperate as the current recession deepens, bankruptcy filings are up 100% since the year 2007, according to data recorded by the US Courts. With more economic difficulties and fewer jobs to go around, people just have decreased (or no) income to pay their debts, whether they are credit cards or home loans.

The rise in bankruptcy filings is also occurring despite the banks' and lawmakers' attempts to create a modern version of the debtor's prison. The 2005 bankruptcy reform legislation was created to cut down on the number of people filing for debt relief by making it more difficult to remove debts. If borrowers did not meet the new requirements, they would be forced to pay back a portion of the accounts to their creditors.

Before the 2005 act went into practice in 2006, record numbers of debtors filed bankruptcy under the old laws. Once the new law went into effect, filings fell sharply for a time, but have begun a steady climb from 2006 until the present. And with tens of millions of Americans now unemployed and facing huge amounts of debt, bankruptcy filings are essentially back to where they were before the reform was created.

With the new bankruptcy laws in effect, simple discharges of debt under Chapter 7 filings were supposed to be reduced. A means test was administered to the requirements to file, and if the debtor did not pass the test, they would be forced into a Chapter 13 bankruptcy if they still wanted relief through the court system.

Although the means test may have prevented some borrowers from filing Chapter 7, the high unemployment rate has guaranteed that many people simply do not have any means to pay their bills. For them, discharging their debt may be the only way to avoid collection actions by banks or collection agencies. And with no means to pay their bills at all, they are able to surpass the court's test and file a Chapter 7.

Thus, banks have always wanted to avoid the possibility of borrowers filing for Chapter 7 bankruptcy and being able to discharge all of their debts. Even if the debtors do not have any assets or income, the lending institutions would rather be able to sell the debts or sue the borrowers and obtain judgments and garnishments against them. If bankruptcy is an choice at all, banks would rather that it be a Chapter 13 repayment plan, as opposed to than a discharge.

Without an end in sight for the recession, and with the government rewarding banks for making bad loans to consumers, bankruptcy filings can be expected to keep increasing. Americans do not have jobs or assets, because they are being forced to subsidize banks which keep making poor lending decisions and then claiming the nation's capital and assets for themselves as ordinary people can not keep up.

01 Sep 2010 00:36:27

Bankruptcy court approves Visteon Chapter 11 plan

Town Hall Bankruptcy court approves Visteon Chapter 11 plan The Associated Press A federal judge has confirmed auto parts supplier Visteon's reorganization plan, clearing the way for the company's emergence from bankruptcy . Visteon, a ... Visteon Retiree Accord Eases Path to Bankruptcy Exit Visteon approved to exit bankruptcy Visteon wins approval of bankruptcy exit plan - -

Source: http://google.com/hostednews/ap/article/ALeqM5hU_CZSWM76mA3d~

01 Sep 2010 00:21:56

Tribune Board Sets Panel to Oversee Bankruptcy

Reuters Tribune Board Sets Panel to Oversee Bankruptcy ABC News By Tom Hals WILMINGTON, Delaware (Reuters) - Tribune Co's board has formed a special committee to oversee the media company's bankruptcy , which unraveled ... Tribune Co. forms panel to oversee bankruptcy reorganization Tribune Board Forms Committee to Oversee Newspaper's Reorganization Plan Tribune Co. forms committee after lenders withdraw

Source: http://abcnews.go.com/Business/wireStory

31 Aug 2010 23:56:33

Young Buck files for Chapter 13 bankruptcy

SOHH Young Buck files for Chapter 13 bankruptcy The Tennessean AP August 31, 2010 Two days after the IRS conducted a surprise morning raid on his Hendersonville home, local rapper Young Buck voluntarily filed for ... Bankruptcy Won't Stop Young Buck's Feud With 50 Cent No-Cashville: Young Buck Files for Bankruptcy Rapper Young Buck Files For Bankruptcy - -

Source: http://tennessean.com/article/D4/20100831/NEWS01/100831037/Y~

31 Aug 2010 15:04:24

JAL submits plan to emerge from bankruptcy

Reuters JAL submits plan to emerge from bankruptcy MarketWatch NEW YORK (MarketWatch) -- Japan Airlines Corp. on Tuesday submitted a bankruptcy -emergence plan to a Tokyo court, according to The Wall Street Journal. The ... JAL To Slash Workforce As Part Of Restructuring Japan Airlines slashes workforce Heard on the Street: JAL Failure, ANA Tail Wind for Now - -

Source: http://marketwatch.com/story/jal-submits-plan-to-emerge-from~

20 Aug 2010 09:00:21

Полтора миллиона американцев могут стать банкротами

Вести.Ru Полтора миллиона американцев могут стать банкротами Вести.Ru Число банкротств потребителей в США по итогам текущего года может вырасти до 1,6 млн человек с 1,4 млн человек годом ранее, свидетельствуют данные отраслевой группы American Bankruptcy Institute. Впервые с 2005 года квартальный уровень банкротства превысил 400 тысяч. Пять лет назад Конгресс ...

Source: http://vesti.ru/doc.html

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