Article Abstract:
The number of bankruptcy filings in the US continues to increase at an alarming rate. In 1996, one in every 96 American households filed for bankruptcy. In 1997, the number of individual case filings is expected to soar by 29% to 1.44 million. A study of 11,000 bankruptcy petitions filed in California, Illinois, Massachusetts and Tennessee between 1988 and 1996 offers new insights into the bankruptcy problem. The findings indicate that the primary cause of bankruptcy is a reduction or interruption in income and the inability or unwillingness of individuals to adjust their spending habits to their current financial situation. This is contrary to the popular belief that bankruptcy is caused mainly by unexpected large expenses or traumatic life events. The findings also point to a number of weaknesses in the bankruptcy system. Recommended solutions include statutory reform and consumer education.
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Article Abstract:
The recently signed Bankruptcy Reform Act of 1994 has a considerable impact on the credit industry. Under the new law credit card debt, whether they be in the form of loans or cash advances, used to pay federal taxes will not be considered dischargable. The legislation also explains the 'DePrizio' preference issue, requires more information to be reported in the Reaffirmation Agreement and the Attorney Affidavit, raises the eligibility limits for those filing for Chapter 13 bankruptcy, and introduces new rules for Chapter 13 payments. In addition, the law gives priority status to child support and alimony obligations, revises the rules regarding home mortgages, and requires debtors to meet all obligations under an equipment lease during the pendancy of the bankruptcy case. The new Banking Reform Act covers all cases filed after Oct. 22, 1994.
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Article Abstract:
Bankruptcy filings have increased, along with bankruptcy costs and the number of fraudulent bankruptcy filings. Personal bankruptcy filings increased by an average of 39,600 per year between 1980 and 1988, and they are expected to increase by an average of 52,500 per year between 1991 and 1998. Bankruptcy costs totaled $12 billion for creditors and $1.5 billion for bank credit card issuers in 1988. Fraudulent bankruptcies have also increased, involving such tactics as transferring assets a shortly before filing for bankruptcy, and incurring debts without expecting to repay them. Visa USA has been attempting to decrease bankruptcies and bankruptcy fraud through a consumer education program and the Bankruptcy Recovery Program.
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