Miscellaneous

Bankrupt

By Anne Skove, Esq.

We have always thought that, boring and depressing as it is, bankruptcy is fraught with legal issues beyond the obvious. State courts should not discount bankruptcy stats. If one person or one company files for bankruptcy, it's likely that an entire family is suffering. This could play out in terms of dissolution, custody, housing, even crime.

Prescient idea from Future Trends in State Courts, 2005 (p. 46): "Although the federal courts manage bankruptcy filings, tangential legal matters, such as foreclosures, divorce, domestic violence, and child support, are resolved in state courts."*

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 also "moves child support to the first priority among unsecured creditors [...] of a somewhat meaningless line." (id.)

Bankruptcy data may not light your fire, but we find it interesting to know that, according to the first report required by the so-called Bankruptcy Abuse Prevention and Consumer Protection Act of 2005:

• Real property accounted for 77% of reported assets


• 64% of debts owed were classified as secured (e.g., homes and cars)


• Most (86%) of the bankruptcy claims filed in 2007 were chapter 7 (i.e., the debtor's assets were sold for cash)


• Of chapter 7 bankruptcy filings, the median average monthly income was $2150; the median monthly expenses were $2405


• Creditors were ordered to pay punitive damages in a whopping 3 cases of misconduct; the total amount paid out was $11,250

See the summary and/or full report.

See also RAND's evaluation (based on what little could be known by its 2007 publication date) of the Act (summary and full document available online -- pdf files for each are listed under the green "add to cart" box).

* Full disclosure: we wrote this section of the report with help from our former KIS co-workers.

Full post as published by court-o-rama.org on July 23, 2008 (boomark / email).