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Why Are Bankruptcy Filing Numbers Declining?

Phoenix Bankruptcy Filing Numbers DecliningA recent analysis shows that the number of bankruptcy filings in Phoenix Arizona and throughout the United States are declining. This must mean that the financial crisis and recession is over, right? — WRONG! If the current trend continues and filings continue at the same rate /pace as the past year, total bankruptcy numbers should continue to decline (for a second straight year in a row).

Perhaps the falling number of filings could be the result of sustained low interest rates, decreased spending, and/or tighter lending standards. These, plus a slightly improving economy has assisted consumers in helping to balance their finances. These are the most common thought of theories to lower bankruptcy numbers, however, there could be additional reasons that the number of people filing for bankruptcy in Phoenix Arizona has declined.

One of the rules of filing chapter 7 bankruptcy is that a person can only declare chapter 7 bankruptcy once every eight years. Thus, if 10 million people have filed already within the past 8 years, that in itself limits the amount of people who are even eligible to consider filing for bankruptcy protection again until waiting the 8 year period, despite their current financial situation. There are probably several people in need of a bankruptcy who just aren’t eligible to file until they wait the mandatory 8 years.

When the number of bankruptcy filings increased in the past 5 years, creditors could see the trend and started working with people more frequently in order to arrange payment plans or to negotiate reduced payments or interest rates in an attempt to avoid having the money they lent discharged in a chapter 7 bankruptcy.

Creditors were pushed to do this as it was better for them to collect some part of the debt than to lose out on it entirely. The willingness of these creditors to work with people has also helped to slow the filing bankruptcy frenzy. People wanting to try to make payments and work themselves out of debt, were more able to do so with creditors willing to work with their debtors, the urgency of filing bankruptcy decreased.

Another theory for the decline in bankruptcies is that people are managing their money more carefully, there is just a plain decrease in spending overall, the decrease in spending has led to less credit card debt, the trend of people to be more careful with their spending habits has aided in the decreased number of filings.

Bankruptcy is still the best solution to many financial situations for individuals, couples, and businesses in Arizona and throughout the United States. A bankruptcy provides an individual with a means to rebuild and recover, however, an increasing number of people have chosen credit counseling, debt reorganization, loan modifications, short sale of homes, and debt consolidation and negotiation instead of filing for bankruptcy protection.

If you are facing a financial hardship or just can’t stay ahead of the bill collector, an experienced and trusted Phoenix bankruptcy attorney can look at your financial situation and help you determine if filing for chapter 7, chapter 11, or chapter 13 bankruptcy or other alternatives to bankruptcy may be in the best interest for you.

You should work with a fair lawyer who will explore and explain all your options available to you in order to get your finances back on track. Don’t you deserve a fresh start?

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