The recent economic situation has led many Americans to have to examine their finances and make changes. In some cases, minor changes to a budget will not be enough to drastically change someone's financial situation. In these cases, one of the only options left is to file for bankruptcy. There are two types of bankruptcy: Chapter 7 and Chapter 13.
Fortunately, the economy has begun to turn around. Also, Americans are aware of the economic situation and have made changes to prevent being in a situation where bankruptcy is the only solution. This has led to a decrease in bankruptcy filings over the last three years by 30 percent. Surprisingly, the largest drop has come in states that were hit the hardest by the downturn.
Between last year to this year alone, bankruptcy filings decreased by 16 percent. Some experts claim that all those who qualified for bankruptcy or needed to file have already done so, leaving no one left to file.
California was one of the states with the highest number of filings and the largest decrease in filings. California saw a decrease of 30 percent in the last year alone. Bankruptcy filings were at their peak in 2010, which saw the highest rates of filing since bankruptcy laws were reformed in 2005.
One of the major benefits of bankruptcy is that it puts an automatic stay on all creditor actions. In Chapter 7 bankruptcy, the individual will be able to eliminate generally all debt. In Chapter 13 bankruptcy, the court allows the debtor to create a debt repayment plan. In either case, California residents should know that filing for bankruptcy is a viable option for relief from crushing debt payments. An experienced attorney can help explain the process and how to qualify.
Source: Yahoo! Finance, "Bankruptcy filings plunge in first quarter of 2013," Susan Ladika, April 11, 2013