What does it mean to file bankruptcy?
It might be a little difficult to read our bankruptcy court statistics if you’re not sure what bankruptcy is, so here’s a simple definition: Bankruptcy is a legal term used to describe a person or a business that can’t pay their outstanding debts. The debtor can start the process by making a petition in court, at which point all of their assets and valuables are closely examined. They may be used to repay a portion of the debts. In some cases the debts are dismissed entirely.
Is filing for bankruptcy public record?
Yes, it is a part of the public record. Bear in mind that people can read about the number of US personal bankruptcies by year, but obtaining any further information than that will be tricky. To access the information, you have to go through a public access system called PACER, but you need to pay for each page you want to take out of the system.
In addition to that, your bankruptcy filings will appear on your credit report for up to 10 years, so if you want to apply for mortgages, loans, or any other kind of credit, lenders will be aware of your filing.
What percentage of bankruptcy is due to medical bills?
According to bankruptcy statistics by year, medical bills are the biggest factor in 18 to 26% of bankruptcies. Our answer to this question is based on Medical Debt as a Cause of Consumer Bankruptcy, a study by Daniel A. Austin. The study was published in 2014 and updated in 2015. Some studies claim that up to 60% of bankruptcies are due to medical bills, but this number is most likely overstated. Unfortunately, it’s difficult to pinpoint one single cause of bankruptcy because usually several factors contribute to someone’s financial problems. It’s entirely likely that 60% of those who file do have some sort of issue with medical debt, but studies point out that it’s not always the main cause.
How many bankruptcies are there?
According to national bankruptcy data, there are two types of personal bankruptcies—Chapter 7 and Chapter 13. There is also Chapter 12, which is almost exactly the same as Chapter 13 but is specifically aimed at farming families.
There are also Chapter 11 and Chapter 9 bankruptcies. Chapter 11 is aimed at large corporations that want to reorganize and continue their business, and Chapter 9 is when cities, towns, villages, counties, taxing districts, municipal utilities, or school districts have to file for bankruptcy.
What are Chapter 7 bankruptcies?
Also known as “liquidation bankruptcy,” Chapter 7 is the most common of American bankruptcies. When a person files for Chapter 7, a trustee is sent to collect all of the debtor’s non-exempt assets and liquidate them into cash. This money is used to repay some or all of the debt, and after that, the person no longer owes that specific debt. They can make a fresh start, but it becomes a part of their credit history. It can be exceptionally difficult to get credit after bankruptcy.
What are Chapter 11 bankruptcies?
This bankruptcy applies mostly to commercial enterprises. Here, the debtors plan to keep operating their business, and to get a bankruptcy filing approved, they must hand in a solid reorganization plan to return the business to profitability.
What are Chapter 13 bankruptcies?
Chapter 13 is aimed at individuals who have a source of income and want to repay their bankruptcy, but are currently unable to do so. If you take a look at the current bankruptcy statistics provided in the section “Chapter 7 and Chapter 13,” you’ll notice that it’s much more difficult to get approved for Chapter 13.