Bankruptcy Filings Down in Fiscal Year 2011

United States bankruptcy filings decreased 8% in fiscal year 2011 as compared to fiscal year 2010.  Total filings dropped from nearly 1.6 million in fiscal year 2010 to just under 1.47 million in fiscal year 2011.  Of further note, filings dropped 15% in the fourth quarter of the fiscal year compared to the fourth quarter of 2010.

Business bankruptcy filings fell 14% to just under 50,000 in fiscal year 2011 compared to over 58,000 in fiscal year 2010.  Non-business bankruptcy filings fell 8% to just over 1.4 million in fiscal year 2011 compared to over 1.5 million in fiscal year 2010.

More specifically, Chapter 7 bankruptcy filings totaled just over 1 million in fiscal year 2011 compared to just under 1.15 million in fiscal year 2010, resulting in a 10% decrease.  Chapter 13 filings fell 4% from over 434,000 in fiscal year 2010 to over 417,000 in fiscal year 2011.  More detailed statistics can viewed on the Unites States Courts website at:  http://www.uscourts.gov/News/NewsView/11-11-07/Bankruptcy_Filings_Down_in_Fiscal_Year_2011.aspx  Additionally, for more Kansas City bankruptcy information please visit my website at http://www.thesmalleylawfirm.com/

How Long Will Bankruptcy Remain On My Credit Report?

People considering filing bankruptcy in Kansas City are often concerned about the consequences to their credit report and how long the bankruptcy will be reported on their credit report.  After filing bankruptcy your credit report will list the date filed, the chapter filed, the case number, case status and closing date.  The Federal Fair Credit Reporting Act (FCRA) allows credit reporting agencies to keep this information on your credit report for up to ten years.  However, the FCRA does not mandate that the bankruptcy remain on your credit report for that long, only that it must be removed after ten years. 

Each credit reporting agency has its own policy regarding the length it reports a bankruptcy.  Generally, Chapter 7 bankruptcy cases are reported for ten years and Chapter 13 cases are reported for seven years.  However, either chapter may be reported for up to ten years.  The ten year period begins on the date the bankruptcy case is filed.  A credit reporting agency may also choose to report your bankruptcy for a shorter period of time.

Many individuals may be scared to file bankruptcy because of it being reported on your credit report for up to ten years and the effect it will have on your credit report and score.  However, most individuals filing bankruptcy already have a lower credit score because of the debts they have incurred and possibly missed or late payments and/or judgments against them.  In return for having your bankruptcy posted on your credit report for up to ten years, individuals filing bankruptcy are often relieved of the overwhelming debts that have been burdening them.  Bankruptcy in Kansas City can provide the opportunity for a fresh start free of most debts and a second chance at a better future.  For more information on bankruptcy please visit my website at http://www.thesmalleylawfirm.com or contact me at (913) 601-3549 for a free consultation.

What is the Means Test?

Individuals who are unfamiliar with bankruptcy often ask what the "means test" is and how it relates to filing bankruptcy.  When filing Chapter 7 bankruptcy in Kansas City" all debtors are required to complete the means test.  The means test determines your eligibility to file for Chapter 7 bankruptcy.  Most individuals filing for bankruptcy are able to pass the means test.  A Kansas and Missouri bankruptcy attorney like myself, Cary Smalley of The Smalley Law Firm, can help you determine if you are able to "pass" the means test and be eligible to file for Chapter 7 bankruptcy.

The means test is essentially a method to compare your income to the median income of your state.  It looks at your actual income for the six months immediately prior to filing bankruptcy.  However, there are certain individuals that do not have to take the means test.  For example, military personnel are exempt from the means test.  If you are required to take the means test and your income falls below the median income for your state, based on the number of individuals in your household, then you will automatically be eligible to file Chapter 7 bankruptcy.

If your income is above the median income for your state you may still be eligible to file for Chapter 7 bankruptcy if the filing is not considering "abusive" under the Bankrupty Code.  In order to determine if the filing is "abusive" additional information must be provided about the debtor's monthly expenditures, along with IRS allowances for certain expenditures.  The filing is not considered "abusive" if the debtor does not have any "disposible income" after deducting expenses from income.

If the debtor still has disposible income after deducting expenses, you may still be eligible to file for Chapter 7 based on a formula.  Even if you are not eligible for Chapter 7 after the formula, you may still be eligible for Chapter 7 in Kansas City by demonstrating certain "special circumstances".

As you can see from above, there are number of ways to meet the means test, but it is complicated.  However, with an experienced Kansas City bankruptcy attorney most debtors are able to satisfy the means test.  For more information about bankruptcy please visit my website at http://www.thesmalleylawfirm.com or contact me at (913) 601-3549 for your free initial consultation.