Bankruptcy law offers people in Kentucky an option for managing debts, but fewer people have resorted to court action in the past year. A report from the Administrative Office of the U.S. Courts showed a decline in bankruptcy filings. They have gone down to their lowest point in 10 years. The end of September 2017 marked the end of the latest 12-month reporting period, which revealed a 1.8 percent reduction in personal and business bankruptcies compared to 2016 figures. Courts recorded 790,830 filings for 2017 and 805,580 filings the previous year.
A law professor who studies bankruptcies acknowledged the decline but pointed out that the hundreds of thousands of filings still illustrated widespread financial distress. He warned that a jump in interest rates could reverse the trend and force more consumers and businesses into bankruptcy.
Another professor from the University of Kentucky College of Law considered the modest annual decline a sign that the economy was stable. He cautioned that a sudden economic downturn could alter the situation for debtors.
According to the report, during the 2017 reporting period, 486,542 Chapter 7s were filed and 296,599 Chapter 13s. The majority involved non-business assets. In a Chapter 7 bankruptcy, a debtor liquidates nonexempt assets to settle debts. A debtor with ongoing income keeps their property but creates a payment plan to repay their debts in a Chapter 13.
National trends, however, do not automatically apply at the individual level. A person who has lost income or become buried in debt for reasons like medical bills or a lawsuit could consult an attorney about filing for bankruptcy. A lawyer could describe the advantages and disadvantages of this course and help a person understand his or her legal options. To proceed with a bankruptcy, an attorney could organize financial records, prepare court papers and advocate for the person’s needs.