Review and Response: Consumer Bankruptcy Filings

Topic/Forum: REVIEW POST BELOW AND RESPOND WITH YOUR OPINION/SOURCES INCLUDING SOME TERMS (bankruptcy, Chapter 7, 11, & 13, debtors, discharged, assignment for the benefit of creditors, liquidation, reorganization and adjustment of debts) In Andrew Keshner’s Market Watch January 2019 article he reports corporate and consumer bankruptcy filings are at a 10 year low and the various reasons for decline in bankruptcy cases. The article explains, “September 2010 court statistics show that during the depths of the Great Recession, almost 1.6 million bankruptcy petitions were filed, with 1.53 million consumer cases making up the vast majority of the caseload” (Keshner 2019). In 2018 new bankruptcy cases had been cut by more than half, with 770,000 cases filed of those 97% were consumer cases. According to Supreme Court Chief Justice John Roberts, “bankruptcy petitions haven’t been so low since 2007” (Keshner 2019). So why the vast decline in bankruptcy filings over the past decade? Bankruptcy experts say, “people may not be filing for bankruptcy because it’s too expensive to do so, and they might have too few assets to protect” (Keshner 2019). Chicago attorney Lorraine Greenberg explained, that attorneys were pushed to raise the rates they charged clients due to the volume of work generated from Bankruptcy Abuse Prevention and Consumer Protection Act (Keshner 2019). In Chapter 7 filing debtors sell off their assets and can have certain debts forgiven. In this type of filing attorney rates can range from $1,200 to $1,500, which are due up front, and the client is must pay court cost in addition to the attorney fees. Chapter 13 involves a restructuring of debt (repayment plan) where the debtor makes planned payments with the goal of having the debt discharged after completion of the court confirmed instalment plan. In Chapter 13, the debtor gets to keep more of their own property, rather than face assignment for the benefit of creditors. Attorney rates to file Chapter 13 are $3,200. Some other reasons for the decline in bankruptcy cases could be from the Recession-era federal mortgage programs that enabled distressed homeowners to work out deals with lenders and the student loan debt crisis. Student loan debt typically is non-dischargeable in bankruptcy, which means filing for bankruptcy wouldn’t help with student loan debt. Recently the President signed two bills into law; the Family Farmer Relief Act of 2019 and the Small Business Reorganization Act of 2019. These bills were designed to make it easier for small businesses and farming family operations to reorganize under Bankruptcy Chapter 11 and Chapter 13. What impact do you think the Family Farmer Relief Act of 2019 and the Small Business Reorganization Act of 2019 will have on with future of bankruptcy cases? Do you think student loans debt should be a dischargeable debt through bankruptcy? If so, why? If not, why? Reference Bankruptcy filings are at a 10-year low, but not for the reasons you might think https://www.marketwatch.com/story/bankruptcy-filings-are-at-a-10-year-low-but-thats-not-necessarily-good-news-2019-01-07 New Bankruptcy Laws Attempt to Assist Family Farming Operations and Small Businesses https://www.fredlaw.com/the_restructuring_report/new-bankruptcy-laws-attempt-to-assist-family-farming-operations-and-small-businesses/