Memphis Tennessee Bankruptcy Filings Take Nosedive, But Why?
About half as many bankruptcy filings occurred in western Tennessee in 2006 as in 2005. 2,877 bankruptcies were filed under Chapter 7 in 2006, compared with 10,995 in 2005. A closer look at the numbers show that bankruptcy filings didn’t go down because of an improved economy, but rather due to the new bankruptcy laws.
According to the American Bankruptcy Institute, just before the new bankruptcy law took effect in October 2005, there was a huge spike in Chapter 7 filings. Following October, there was a substantial decrease in filings. “There wasn’t anything left. The pipeline had been pulled forward.”
Other aspects of filing for bankruptcy may also be dampening enthusiasm for bankruptcy filings:
A Memphis bankruptcy lawyer said he believes that some people think “there is no bankruptcy any more.”
The cost of filing a Chapter 7 bankruptcy in Memphis increased from $200 to $299. Memphis bankruptcy lawyers have increased their fees for a Chapter 7 filing from about $600 to $850 to $1,100.
The requirement for credit counseling before filing a bankruptcy has deterred some potential filers.
The means test, barring some people from filing under Chapter 7 bankruptcy, has scared some people away. The means test requires some filers, who have the ability to pay back some of their debt, to file under Chapter 13.