More Bankrupts Choosing Ch. 7 Over Ch. 13

Posted by Orb Staff on January 06, 2010 No Comments
Categories : Mortgage Servicing

November 2009 marked the ninth month in a row that U.S. bankruptcy filings exceeded 100,000, bringing the total number of filings in the first 11 months of last year to 1.3 million, the National Bankruptcy Research Center (NBKRC) reports.

In November, more than 110,000 individuals filed for bankruptcy – a 12% increase over November 2008. According to the NBKRC, Chapter 7 filings (i.e., liquidation) grew by more than 42% year over year, whereas Chapter 13 filings (rehabilitation) increased by 12%. The declining share of Chapter 13 filings in 2009 – about 28% as of the end of November – contrasts with 2005 legislation meant to encourage debtors to choose the repayment route, the center says.

Nevada held the highest household-adjusted filing rate among the states, at about 2.5 times the national average. Tennessee, Georgia, Alabama and Indiana rounded out the top five.

Arizona saw the biggest increase in filings since 2008 (an 80% jump), followed by Nevada, California, Wyoming and Utah (all with increases of about 60%).

SOURCE: National Bankruptcy Research Center

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