As the Economy Plummets, impoverishment Escalate

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In 2009, 372 cases of liquidation were filed in the Midland Division of the Western District of Texas US bankruptcy Court. This structure was a rise from the 243 filed in 2008 and represented an increase of about 53%. Most of these were filed by companies under Chapter 11 bankruptcy. In a typical year, an standard of 80% of bankruptcy are Chapter 11 ones. But of late, there has been also a rise in filings by individuals who file either under Chapter 7 or 13.

The rise in financial ruin is seen as a domino effect originating from a weaker economy and decline oil prices that result in poor business performances of many companies. Especially hit were smaller companies with up to 100 employees in the oil service industry that had to implement drastic belt tightening measures including laying off workers. This naturally resulted in workers working fewer hours and eventually trying to pay their overdue bills on credit or resorting to money lending services. These desperate attempts to stay monetary afloat would only exacerbate the site and eventually many file for impoverishment.

apart from the rise in number of impoverishment last year, the numbers were still lower evaluated to before the insolvency Abuse Prevention and Consumer Protection Act (BAPCPA) came into effect in 2005. The common number of insolvencies pre-BAPCPA was 911 a year (the highest was 1,205 cases in 2005). But after the BAPCPA took effect, the numbers have become closer to 273 a year, a reduction of about 70%.

The BAPCPA made it mandatory to attend pre-economic failure credit counseling and a economic management course before your amount on due could be released. But the most prominent feature of the BAPCPA is a system that makes it evermore difficult to obtain a Chapter 7 economic failure approval thus forcing inhabitant seeking bankruptcy to file under Chapter 13 as an alternative. A Chapter 7 economic failure eliminates your unsecured amount outstnding like credit card and medical bills whereas a Chapter 13 ruin restructures your amount on due such that you pay off them over a period of 3 to 5 years.

But the BAPCPA is not enough on its own to reduce the number of financial ruin if oil prices keep to plummet. want the oil prices stabilize, it would still take 60 to 90 days before the oil companies can benefit from it and even longer for it to be felt by the workers.

Hence, there is unlikely to be a significant reduction in the number of economic failure filed this year at least for 6 to 9 months.

If you are contemplating filing for ruin either for your company or yourself, contact our team of expert Tampa lawyers Call us at (813) 200 4133 or toll free (800) 965 5074 for a free consultation.

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