Nebraska Bankruptcy Filings for 2012 Decrease
The number of Nebraska bankruptcy filings were the lowest since 2007 and marked nearly a 12% decrease from the number of bankruptcy filings in 2011, which was nearly 17% lower than the previous year. In total, Nebraskans filed 5,820 bankruptcy cases. Of those, 4,066 were Chapter 7 Liquidation cases, 3 Chapter 9 municipality bankruptcy cases, 24 Chapter 11 reorganization cases, 5 Chapter 12 farm/ranch bankruptcy, and 1,722 Chapter 13 adjustment of debt cases.
Bankruptcy filings in Nebraska have been lower than normal since 2005, when significant changes to the Bankruptcy Code, called the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), were enacted by Congress with the intent to force those with some disposable income to file Chapter 13 and bar them from filing Chapter 7. In that year, 12,110 bankruptcy cases were filed in Nebraska. Nearly a 35% increase from the previous year. In 2006, the year after BAPCPA was enacted, bankruptcy filings fell to 4,154.Within the last 5 years, only 2009 and 2010 reflect bankruptcy filings somewhat commensurate to pre-BAPCPA levels; the period typically defined as the end of the “Great Recession”.
Reasons For The Decline
Why are the number of Nebraska bankruptcy filings low? It could be a variety of factors. Nebraska has not been hit has hard by the foreclosure crisis as other states. The Home Affordable Modification Program (or HAMP) was a program instituted by the federal government to encourage lenders to modify mortgage loans. This program has helped temporarily stave off foreclosures in Nebraska. Bankruptcy proves to be a very effective tool with dealing with foreclosures in Nebraska. The number of foreclosure notices fell to the lowest level in seven years. This could be due to the HAMP program, the general negative national attitude toward lending banks, or the lawsuits that have been filed against these banks.
Another reason could be due to the number of unemployed in Nebraska. While official numbers list Lincoln’s unemployment at about 3%, this doesn’t take into account the numerous people who have fallen off of the official lists due ineligibility to be granted unemployment benefits. The unemployed do not necessarily have an immediate need to file bankruptcy, because without significant property or wages, there really isn’t much a creditor can do to collect an owed debt.
What Will Happen in 2013?
If what the media has said is true and the economy will see some minor improvement, I would predict that bankruptcy filings in Nebraska would increase. The reason is that with improving employment, creditors will have the ability to garnish Nebraskans’ wages to collect debt owed. A bankruptcy filing is a tool to stop the garnishment of wages.
Additionally, Nebraska is likely poised to see somewhat of an increase with foreclosure filings. Again, bankruptcy is a tool to help debtors remain in their homes and catch up on missed mortgage payments.
Lastly, in most situations, a debtor who has filed a Chapter 7 is not entitled to a discharge of debt until eight years has passed since the previous bankruptcy filing. Those who filed in 2005 prior to the enactment of BAPCPA, may be eligible to file another Chapter 7 bankruptcy case in 2013, if their circumstances have not improved.
What You Should Do
If you have debt problems and not sure what to do about them, you should seek the advice of a reputable credit counseling company, or a debt management or bankruptcy attorney. Your attorney will be able to advise whether bankruptcy would be the best option for you or whether some other form of relief would be beneficial. If bankruptcy is the way to go, your attorney will be able to provide you with what type of bankruptcy you should file and give you a timetable of when to file.
Please contact me if you are having debt problems. I can help.