Consumer Bankruptcies Rise in First Half of 2023

Over the first half of 2023, bankruptcy filings have risen significantly from this same time last year, according to a recent report from MSN.com. The report underscores that the rise in overall bankruptcy filings has occurred despite the fact that the pandemic student loan forbearance remains in effect through September. By October, when a large percentage of Illinois residents begin making payments on federal student loans again — which is now definite, given that the Supreme Court struck down the Biden administration’s student loan cancellation plans in Biden v. Nebraska (2023) in June — bankruptcy may be a good option for those struggling with student loans.

What do you need to know about rising rates of consumer bankruptcies in the country, and what are the potential implications? Our Oak Park bankruptcy attorneys can say more.

More Than 200,000 Bankruptcy Cases Have Already Been Filed in 2023

According to data from the American Bankruptcy Institute and Epiq Bankruptcy cited in the report, there have already been more than 217,000 bankruptcy filings in 2023, including both personal and business filings. In total, that number represents an increase in bankruptcy filings by 17 percent from June 2022, or a year ago. The current executive director of the American Bankruptcy Institute explained, “the growth in filings is reflective of more families and businesses facing surging debt loans due to rising interest rates, inflation, and increased borrowing costs.”

If you are wondering how many of the more than 217,000 filings this year were consumer bankruptcy filings, the number is quite high. Indeed, as the report underscores, “consumer cases historically make up the brunt of bankruptcy cases, and 2023 has been no exception.” Of the approximately 217,000 filings, about 205,000 (or 94 percent) were consumer filings.

Rises in Both Chapter 7 and Chapter 13 Bankruptcy Cases

Consumers generally file for either Chapter 7 bankruptcy (liquidation bankruptcy) or Chapter 13 bankruptcy (reorganization bankruptcy). Both types of filings have increased in the first half of 2023 compared with the first half of 2022.

To file for Chapter 7 bankruptcy, individual debtors typically must pass the “means test” to prove that the debtor would not be abusing the legal system by filing for a liquidation bankruptcy and having eligible debts discharged. Chapter 7 bankruptcies tend to take from four to six months, during which time non-exempt assets are liquidated to repay creditors, and at the end of the case, eligible debts get discharged. To file for Chapter 13 bankruptcy, a debtor must be able to make regular monthly payments on a plan through which debt will be reorganized. Then, after three to five years of making regular payments, any remaining eligible debt may be discharged.

Contact Our Oak Park Bankruptcy Lawyers

Whether you are in the early stages of considering bankruptcy or you have made the decision to move forward with a bankruptcy filing, it is important to get in touch with an experienced Oak Park bankruptcy attorney. Contact the Emerson Law Firm to learn more about how we can assist you with a Chapter 7 or Chapter 13 bankruptcy case.



See Related Blog Posts:

Are Consumer Bankruptcy and Personal Bankruptcy the Same Thing?

Bankruptcy Code and Automatic Stay Apply to Federally Recognized Indian Tribes

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