On behalf of Law Offices of Mark M. Kratter, LLC on January 25, 2013
Some encouraging numbers have been seen on the Connecticut bankruptcy front, leading experts to suggest that consumers who file may have more optimism when it comes to paying down debts and turning their financial situations around. Although Chapter 7 bankruptcies are more common in the state than Chapter 13, the overall numbers for Chapter 7 have declined. Recent reports show Chapter 13 bankruptcies have increased by almost 1000 from 2011 to 2012.
Chapter 7 involves turning over the majority of one's personal property in an effort to pay down debts and satisfy creditors. The assets are liquidated and the proceeds distributed under the supervision and direction of the court. However, Chapter 13 often allows consumers to maintain the majority of their property while attempting to pay off their debts over a period of time. This type of bankruptcy requires a plan approved by the court to pay the debt, normally spanning a period of several years.
The recent rise in Chapter 13 filings may mean consumers are struggling with debt but feel confident they will eventually be able to get control of the situation. In the state, Chapter 7 normally accounts for a large majority of all personal bankruptcies. However, recent numbers show Chapter 7 filings actually decreased by 15 percent in 2012, but Chapter 13 filings were up by 9 percent. When the numbers for both types of personal bankruptcies and Chapter 11 were combined, the state's bankruptcy numbers have declined overall by 12 percent.
The numbers show positive news and a potential recovery in Connecticut. Chapter 13 bankruptcy often allows consumers the opportunity to retain their possessions, including cars, businesses and their homes while they go through the process. However, to qualify for this type of bankruptcy, a certain debt load must be met. If debt continues to be an issue in the household, it may be worth researching to see if this type of bankruptcy can meet one's current financial needs.
Source: The Register Citizen, "Chapter 13 personal bankruptcies outpace Chapter 7 filings in Connecticut," Luther Turmelle, Jan. 16, 2013
