Bankruptcy filings have declined in New York

There has been a decline in the number of bankruptcy filings nationally and it is attributed to lower unemployment and banks being more conservative about lending money. According to the Federal Reserve Bank of New York, overall household debt fell by $78 billion during the second quarter of 2013 and delinquencies decreased by 5.7 percent. Mortgage debt, which comprises the largest piece of household debts, was reduced by $91 billion dollars, falling to $7.84 trillion.

Compared with the bankruptcy filings in 2012, insolvencies filed in federal courts decreased by 12 percent. Business bankruptcies also declined in the same period. Approximately 30 percent of those who filed for bankruptcy in 2012 have filed before, however, there are limitations for repeat filings.

Federal law governs personal bankruptcy filings, but each state may have certain rules that apply in certain cases. Under the bankruptcy code, there are four relief options, which include Chapter 7 or liquidation and Chapter 13 or reorganization. A person may file again for a Chapter 7 bankruptcy eight years after the last filing and six years after filing for Chapter 13.

There are several reasons why a person may be faced with extreme debt, such as unemployment, credit card debts, increasing interest rates, the struggling economy and medical debts. Getting out of debt is not easy. No bankruptcy option is ideal in every possible way. Eliminating debt and having a fresh financial start is possible.

There are several options that a person can choose to avoid bankruptcy, such as changing spending habits, restructuring the mortgage, borrowing from friends and family, selling assets and debt settlement negotiations. However, if those options are not available, filing for bankruptcy may be the best solution.

Source: Epoch Times, “Bankruptcy Filings Down by 12 Percent,” Heide Malhorta, Nov. 6, 2013