Giant graphic of information, courtesy of Billshrink:


click for ginormous graphic

Category: Economy, Finance

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

9 Responses to “Personal Bankruptcy in America”

  1. The Curmudgeon says:

    The metric for availability is wrong. Chapter Seven should be marked as only available to people that meet income criteria, while Chapter Thirteen is available to all, no matter the income, if they agree in their repayment plan to pay all their debts back. Also, debts aren’t “reduced” in Chapter Seven, they are discharged, if they aren’t of the type, like student loan debt, that is ineligible for discharge.

  2. patient renter says:

    I’m starting to think that Barry would publish a ginormous graphic of just about anything remotely related to economics or finance :)

    ~~~
    BR: Not so far from the truth!

  3. Joe Retail says:

    Am I reading this right: up to 11 bankruptcies per 1000 people over a four month period? That sounds ginormous to me – at that rate 10% of the state of Nevada goes bankrupt, on average, every three years.

  4. crankitto11 says:

    Agree with Curmudgeon, the comparison chart is seriously misleading on several points. Another point is that 95% of those who meet the income criteria for Chapter 7 will not give up any property in the bankruptcy — their household goods, car, even their house (assuming it doesn’t have a lot of equity, the definition of “a lot” depending on the state where you live) will be protected as “necessities of life” under their state’s homestead exemption.

  5. Transor Z says:

    Chapter 13 is limited to people with less than $360,475 in unsecured debt and $1,081,400 in secured debt. These numbers get adjusted periodically per CPI. A means test determines whether the plan will be 3 years or 5 years (above median income = 5 year plan). Under Chapter 13, unsecured creditors normally take a substantial haircut, in my experience often in the range of about 60% – 80%. After the plan runs, any unpaid unsecured debt (with a few exceptions) is discharged in Chapter 13.

    As a practical matter, Chapter 7 is limited to persons whose household income is in a range below to a little bit above median income as determined for their state and household size. The chart is absolutely wrong in suggesting that anyone can file for Chapter 7. Chapter 7 is a faster, cheaper way to a complete discharge; the 2005 BACPA reforms try to steer debtors into Chapter 13. The filing fees are $25 cheaper for a Chapter 13 petition.

    A key difference is that Chapter 13 requires a source of regular income, which is why it is sometimes called the “wage earner’s plan.”

  6. Lariat1 says:

    @Transor Z: Thanks for the clarification between the two. This is becoming the year that we just get by. Lots of jobs but leaner in the payoff.

  7. Transor Z says:

    @lariat1:

    One thing I’d recommend is drawing a line in the sand at cashing in your 401(k). If you’re seriously thinking about doing that to make ends meet, I’d go talk to somebody first for legal advice.

  8. Lariat1 says:

    @Transor Z: Thanks, I already have that line drawn. I learned an awful lot making it through last year. Thankfully we own almost all equipment and building. I’m just pretending that we are back when we started this adventure up ( years and years ago). It’s like being young all over again. LOL… i think it’s going to be a whole different world out there for small businesses for quite some time.

  9. [...] Bankruptcy in America (Big Picture) Barry Ritholtz flags a very pretty graph of a very ugly [...]