Our last two posts discussed some reasons seniors and retirees are filing bankruptcy and what the possible benefits are from doing so. Today we are going to discuss the most recent 2010 statistics published about bankruptcyfilings in South Florida and what these numbers imply.
According to the U.S. Bankruptcy Court in Miami, counties in South Florida ended 2010 with 34,579 bankruptcy filings. Palm Beach, Broward and Miami-Dade counties had almost 10,000 less bankruptcies the year before, ending 2009 with only 24,684 bankruptcy filings. The American Bankruptcy Institute reported that nationwide, 1.53 million consumers filed bankruptcy in 2010. So why are more individuals seeking bankruptcy protection?
One bankruptcy lawyer describes the reason as a ripple effect from the state the economy is in. Businesses are filing bankruptcy and laying off employees, unemployment rises and individuals are finding difficult to manage debt, debt continues to increase and eventually the individual can’t afford to make monthly payments. According to an article by the Sun Sentinel, South Florida has the highest unemployment of any metro area in the state of Florida. Florida’s unemployment rate in November was 12 percent.
Statistics report that 70 percent of the bankruptcy filings were under Chapter 7 during December in South Florida. Why are more individuals filing Chapter 7? When an individual files Chapter 7, they eliminate most of their debt by selling off assets. The funds from the sales of assets are then distributed to creditors in exchange for discharging the debt. In Chapter 7, most unsecured debt such as credit cards and medical bills can also be eliminated. Individuals may also have the option of protecting some assets such as a house, car or retirement funds.
With the amount of debt that individuals are accumulating, it is becoming more difficult to file Chapter 13. Chapter 13 allows individuals to work out a payment plan after reorganizing and consolidating debt. However, some business and individuals own too much property and other debt in order for it to be possible to even manage lower payments.
The economy has damaged the financial stability of many business owners and individuals of all walks of life. For some individuals, Chapter 7 may be the best solution to beginning the New Year with a fresh start. Unfortunately, this economy has put thousands of people in tough financial situations, but there are options consumers can pursue when debt becomes unmanageable.
Sun Sentinel: “South Florida bankruptcies up 40% in 2010,” Marcia Heroux Pounds, 3 Jan. 2011