Phoenix Bankruptcy Law Blog

When it comes to race, the burden of finances doesn't seem to discriminate. But a recent study suggests that those who help people file for bankruptcy do, showing the importance of choosing an experienced bankruptcy lawyer who has his or her client's best interest in mind.

The study, which was adjusted for income, homeownership, assets and education, shows that black people are about twice as likely to file for Chapter 13 bankruptcy as white people. Through a study that used data from actual bankruptcy cases and a lawyer questionnaire, there is apparent evidence that lawyers often direct black people toward the more time-consuming and tricky type of bankruptcy, which can hurt them in the long run. On the other hand, Chapter 7 tends to have a higher success rate and is also less expensive.

Our Phoenix readers may be interested to learn that bankruptcy claims trading, the practice of buying and selling creditor's claims against bankrupt companies, saw a significant decrease between July and August.

Reuters reports that the number of bankruptcy claims traded fell from 1,352 in July to 891 in August. The total value of claims traded in August was $2.22 billion, down from $3.55 billion in July. The latter number was, according to claims trading platform SecondMarket, the highest value of bankruptcy claims traded so far this year.

Our Phoenix readers may be interested in a recent Fox Business article discussing the issue of converting from Chapter 13 to Chapter 7. Our readers may not be aware that it is possible to do so provided you meet the requirements to qualify for a Chapter 7 bankruptcy.

The possibility of converting can be a relief to those who begin with a Chapter 13 bankruptcy and find themselves months into the process and unable to keep up payments. Converting to Chapter 7 allows such individuals to transition from a repayment plan to a liquidation plan.

Our readers in Phoenix, especially college graduates, might be interested in a recent study by the Institute for Financial Literacy which found that the number of college graduates filing for bankruptcy protection has increased in recent years. According to the study, 13.6 percent of consumers filing for bankruptcy in 2010 were college grads, a 2.4 percent increase from 2006.

The study looked at 50,000 consumers between 2006 and 2010, with an eye toward tracking the financial well-being of debtors since the passage of the Bankruptcy Abuse Prevention and Consumer Protection Act. The study found that both unemployed and higher earning Americans have experienced an increase in bankruptcy filings. In 2006, the year the study began, around 5.5 percent of participating debtors earned in excess of $60,000 per year. That number was over 9 percent higher, though, by 2010.