Consumers Filing for Bankruptcy With Fewer Assets and Less Debt
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Consumers Filing for Bankruptcy With Fewer Assets and Less Debt

September 19, 2012

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American consumers are filing for bankruptcy with less debt, but also fewer assets, than they did a year ago, according to a report from the Albuquerque Journal.

In New Mexico, the total amount of consumer assets in bankruptcy dropped by 23 percent in 2011, while the total amount of debt dropped by 25 percent that same year.

This trend mirrors the national picture, in which the struggling economy has forced families to earn less money and make fewer purchases. The bankruptcy statistics were recently released by the federal government, which has an obligation to report consumer filings thanks to rules set forth by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005.

Incidentally, this change in bankruptcy law was supposed to reduce the amount of filers, but in recent years, the number of people seeking debt relief in bankruptcy court has skyrocketed.

This trend changed slightly in 2011, which saw a modest 11 percent reduction in the number of consumer bankruptcy filings compared to the previous year. But one of the most staggering statistics revealed this week was that 28 percent of bankruptcy filers last year were filing for a second time.

This statistic suggests that some filers may be filing for bankruptcy without the help of a bankruptcy attorney. In doing so, they may be running the risk of filing a faulty claim, which forces them to head back to bankruptcy court a second time.

In addition to the high rate of repeat bankruptcy filers, the report also discovered that filers have far fewer assets than they did two years ago. This trend, sources say, may be attributed to decreasing home values, typically the largest asset owned by most American families.

Sources say that homes account for 60 percent of the assets listed by American consumers in their bankruptcy filings.

So when housing prices plummet, bankruptcy courts see a significant drop in the financial health of American consumers.


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