Bankruptcy Filings Decrease, But Not for the Reasons You Think

If we hear in the news that personal bankruptcy filings have decreased over the last year, most of us are likely to think it’s because fewer Americans need bankruptcy protection. However, according to a recent article from ACA International, the total number of bankruptcy filings haven’t dropped for the reasons that you’d think. Instead, the statistics suggest that many of us—even those who could benefit from consumer bankruptcy—may have avoided filing for Chapter 7 bankruptcy or Chapter 13 bankruptcy because of the cost of the filing fees.
If you’re having trouble paying monthly bills or making mortgage payments, you might want to learn more about how consumer bankruptcy can help you to get a handle on your debts. An experienced Chicago bankruptcy lawyer at the Emerson Law Firm can speak with you today.
Bankruptcy Fees Decline Sharply
Between January 2014 and January 2105, bankruptcy filings in the country decreased by about 14 percent, according to data collected by the American Bankruptcy Institute. In terms of numbers, bankruptcy filings totaled 68,271 by the end of January 2014, and they dropped to 59,037 by the end of January 2015.
Those numbers include both personal and business bankruptcy filings. But even consumer bankruptcy filings showed a significant drop. Indeed, between January 2014 and January 2015, the total number of personal bankruptcy filings declined by about 13 percent (from a total of 65,347 filings in January 2014 to a total of 56,588 filings in January 2015).
To be sure, bankruptcy filings have shown a steady decline over the last 50 consecutive months, the American Bankruptcy Institute reports. Yet is the drop in filings actually a good thing? Or are some Chicago residents shying away from consumer bankruptcy—which could give them a clean start—for the wrong reasons? Samuel J. Gerdano, the Executive Director of the American Bankruptcy Institute, attributed the increasing decline in filings to fears about the costs of filing. “High costs to file,” he explained, “continue to reduce the number of consumers and businesses seeking the fresh financial start of bankruptcy.”
Are Bankruptcy Filing Fees Too High?
Despite declines in the overall rate of filings across the nation, Illinois maintains one of the highest per capita filing rates with 3.89 total filings per 1,000 per population, the article reported. The states with the highest filings, in addition to Illinois, include Tennessee, Alabama, Georgia, and Mississippi.
So, does it really cost too much to file for bankruptcy, or is this simply a misconception shared by many consumers? In Illinois, there’s a filing fee of $306 for Chapter 7 bankruptcy. That fee is a little bit lower if you file for Chapter 13 bankruptcy, in which case you’d be paying a $281 filing fee.
While filing fees can seem steep and can present financial barriers to consumers, it’s important to think about how personal bankruptcy might be able to help in the long run. And if you’re currently dealing with significant anxiety over debts you cannot pay, filing for Chapter 7 bankruptcy might be a good option for you.
Bankruptcy law is very complicated, and you should never make a decision without discussing your options with an experience Oak Park bankruptcy attorney. Contact us today to learn more about how we assist consumers throughout the Chicago area.
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