People are more likely to file bankruptcy in March or April when they have money from income tax refunds available to apply towards bankruptcy attorney fees and court costs," explains Utah attorney Len Carson.
Salt Lake City, Utah (PRWEB) March 15, 2013
Each month, the United States Bankruptcy Court, District of Utah, publishes bankruptcy filing statistics for the prior month and year. The Court recently published its February 2013 bankruptcy filing statistics. What does the report show?—that the number of Utah bankruptcy filings filed by Utah bankruptcy lawyers and pro se continue their downward trend which started last year.
The Court breaks down the number of bankruptcy filings by Chapter 7, Chapter 11, Chapter 12, and Chapter 13. Each bankruptcy type serves a specific purpose:
Chapter 7 bankruptcy is intended to assist people who are struggling financially and who lack the ability to pay their existing debts. Typically, a “means test” is used to assess their ability to re-pay. If their income is low enough, they will qualify for Chapter 7, and will not be required to make monthly payments.
Chapter 11 bankruptcy allows businesses and some individuals to re-organize their debts. Because such debt relief is complicated, debtors seeking this option are encouraged to have an attorney prepare the petition.
Chapter 12 bankruptcy is similar to Chapter 13 but has been specially designated for family farmers and fishermen. These cases are quite uncommon.
Chapter 13 bankruptcy allows people with regular income to repay all or a part of their debts. These individuals make payments over a 3 to 5 years period to a trustee based on a payment plan that they set up with the court.
The Bankruptcy Filing Statistics show the typical monthly variations in bankruptcy filings from January to February. The statistical report indicates that the January 2013 to February 2013 Chapter 7 filings increased from 560 to 639; Chapter 11 filings decreasing from 4 to 2; Chapter 12 filings remaining at 0; but the Chapter 13 filings decreasing from 400 to 368. It is common for bankruptcy filings to increase each year from the months January to February.
What is unique, however, is January 2013 total filings were only 964 compared to January 2012 total filings of 1,103; similarly, February 2013 total filings were only 1,009 compared to February 2012 total filings of 1,279. What is also surprising is the decrease in Chapter 13 filings from January to February 2013.
Historically, there are monthly variations in the number of filings that occur. "People are more likely to file bankruptcy in March or April when they have money from income tax refunds available to apply towards bankruptcy attorney fees and court costs," explains Utah attorney Len Carson. But, the filings in December are lower because debtors are less likely to file around the holiday season. Many debtors are also recovering financially from holiday expenses incurred in December and need to save up some money in January.
The total number of bankruptcy filings that occur annually may indicate economic trends on a year-to-year basis. For instance, the total number of bankruptcies filed in Utah in 2012 trended downward from bankruptcies filed in Utah in 2011. The first 2 months of 2013 continue to illustrate this downward trend.
The question arises, why are bankruptcy filings down? Such decrease in the number of Utah bankruptcy attorney filings may indicate that the Utah or national economy is improving. Or the decrease may indicate that the banks are not foreclosing on mortgaged properties as aggressively as they in the years 2011 and 2012. Or the decrease may be a sentiment among debtors that their financial circumstances may improve and that there may be an alternative to bankruptcy.
As for the monthly Utah bankruptcy filings statistics updates, it is interesting to continue looking at these bankruptcy filing trends and try to assess what they may indicate on Utah’s economic condition
Jeff Butler, Utah Lawyer
Pearson, Butler & Carson, PLLC, is a Debt Relief Agency that helps people file for bankruptcy relief under the Bankruptcy Code.