New Jersey Bankruptcy Filings Increase Over Last Year

September 23, 2010 (Press-News.org) Amid some promising signs of economic recovery, Bankruptcy filings are heading in a less promising direction. Record numbers of businesses and individuals are filing for Bankruptcy in New Jersey and around the country. The U.S. Bankruptcy Court reports that, in the 12 months ending August 2010, New Jersey bankruptcies increased compared to the year before:
- Consumer bankruptcies increased by 6,881 (more than 20 percent)
- Business bankruptcies increased by 23 (just under 2 percent)
- Chapter 7 Bankruptcy filings increased by 6,229 (more than 25 percent)
- Chapter 13 Bankruptcy filings increased by 720 (almost 9 percent)

In Bergen County alone, Bankruptcy filings increased from 2778 to 3545, a difference of 767 (more than 25 percent).

Chapter 7 vs. Chapter 13 Bankruptcy

Most of the New Jersey Bankruptcy filings were under Chapter 7, known as a "fresh start" Bankruptcy. In Chapter 7 Bankruptcy, most debt is erased. The Debtor can also elect to retain or discharge debt which is secured, such as on a vehicle or house. However, the Debtor "must" be up to date in these payments at the time of filing a Chapter 7.

The reported increase in Chapter 7 Bankruptcy filings during the last twelve months is particularly striking given the 2005 Congressional intent to reduce this type of relief to Debtors, when changes were made to federal law. As a result of those changes Chapter 7 Bankruptcy has become more complex to file, and legal fees are typically higher than before the law was passed.

Another option is Chapter 13 Bankruptcy, known as "reorganization." In a Chapter 13 past due debt on secured debt, such as on a vehicle or house, can be paid over a period of time, usually 36 to 60 months. Again the Debtor is permitted to elect to retain or discharge this type of debt. Other unsecured debt is repaid typically at a lower rate. However, each case is specific to that individual. Chapter 13 filings usually require continued income, which is an issue for long-term unemployed Americans, in addition to those who have been unemployed less than six months.

In the third quarter of 2009, Bankruptcy filings were trending downward. This was the first such decrease since 2005 and raised hopes of economic recovery. However, by the fourth quarter of 2005, Bankruptcy filings hit what was a new record at that time. This upward trend in Bankruptcy filings has continued to escalate. Bankruptcy filings are considered a lagging indicator and often increase about a year after the economy bottoms out.

Speak With an Attorney

If you are considering Bankruptcy, speak with an experienced attorney , one who has practiced in this specialty and has the knowledge and experience to assist you. Weigh your options and learn about the benefits and drawbacks of the different types of Bankruptcy.

Article provided by Klein & Radol, LLC
Visit us at www.kleinradol.com