• 24
  • January
    2012

Our Nashville readers may be interested to know that the total number of bankruptcies filed in Shelby County has decreased over the last several years. In 2011, bankruptcy filings in all chapters decreased from 12,461 to 12,414. The number of Chapter 7 filers with the highest debt also decreased, going from 3,282 in 2010 to 3,112 in 2011. Chapter 13 bankruptcies slightly increased in 2011, going from 9,134 in 2010 to 9,268.

But that doesn't necessarily mean that the economy is improving.

According to some, the downward trend indicates that fewer people are able to file for bankruptcy because they can't afford it. Particularly with Chapter 13 bankruptcy, fewer people have been able to fund the repayment plan at the heart of the filing.

In Chapter 13 bankruptcy, bankruptcy courts order a debt repayment plan that uses their income to gradually pay off their debts. In Chapter 13 repayment plans, certain debts must be paid in full, and these are termed "priority debts." Included in this group are things like taxes and child support payments. Payments on secured debts-as with vehicles or homes-must also be included in the repayment plan.

In some cases, people need to convert to Chapter 7 bankruptcy because they are unable to afford the payments. Sometimes people lose their jobs while in bankruptcy and

Fewer businesses filed for bankruptcy last year. In 2011, 34 businesses filed Chapter 11 filings, which is down 11 from 2010.

There is no doubt that people continue to struggle, despite the decreasing number of bankruptcy filings. Those who feel they may need to apply for bankruptcy should speak with an attorney to determine the best course of action.

Source: memphisdailynews.com, "Drop in Bankruptcies Belies Economic Picture," Aisling Maki, January 20, 2012.