There are many myths and inaccuracies floating around about bankruptcy, which largely contributes to why there is such a stigma surrounding it. Hundreds of thousands of people, if not more than a million, file bankruptcy in the U.S. every year, so if you’ve begun the process or are considering filing, you are certainly not alone.
While you may have heard many things about bankruptcy, some of the actual numbers may surprise you. Having a good understanding of bankruptcy, even the statistics associated with it, can take some of the fear out of the equation and put it into perspective.
- There are far more Chapter 7 bankruptcies filed than Chapter 13. In 2019, 62% of the more than 733,000 bankruptcy cases filed in the United States were Chapter 7, 37% were Chapter 13, and just 1% were Chapter 11, according to the United States Courts’ Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) report. Chapter 7, also called “straight bankruptcy,” is the most commonly filed type for individuals and it essentially wipes out most debt, while under Chapter 13 bankruptcy, debt is paid back over the course of three or five years. Chapter 11 is almost always filed by businesses and it gives them time to restructure and reorganize their debt.
- According to the American Bankruptcy Institute, the three states with the highest number of personal bankruptcy cases filed in 2019 were Alabama, Tennessee, and Georgia. The states with the fewest were, in descending order, North Dakota, Vermont, and Alaska.
- To date, the year with the highest number of non-business bankruptcies ever filed was 2005. Many people think they were highest in the years following the Great Recession, 2009 and 2010, but that is not the case – though they were high in those years. A stunning 2,078,415 people filed bankruptcy in 2005, up from 1,597,462 the previous year. By comparison, 1,344,095 people filed in 2009 and 1,538,033 cases were filed in 2010.
- The most common reason for filing bankruptcy is a sudden loss of income, including medical-related job losses, according to data from The Motley Fool. This accounted for 61.5% of the bankruptcy filings in 2019. Medical expenses were the second-most common reason for filing, accounting for 37% of cases.
- More than half of the people who filed bankruptcy from 2011 to 2019 were middle-aged, between 35 and 54. Interestingly, 18-24-year-olds and 25-34-year-olds saw decreases in bankruptcy filing rates during that timeframe, while people 55 and up saw significant increases in the number of filings.
Each and every person and financial situation is unique, and there is much to consider when deciding whether to file bankruptcy. France Law Group in Toledo, Ohio, has helped guide thousands of people and businesses through bankruptcy over the course of more than a decade. Nobody knows Ohio and Michigan bankruptcy laws better than France Law Group!
Contact us online or call us at (419) 725-9300 to set up a complimentary consultation and discuss the specifics of your situation. You do not have to do this alone! Your fresh start begins here.