FOR IMMEDIATE RELEASE
Editorial Contact:
Aglaia Pikounis
The Warren Group
(617) 896-5370
apikounis@thewarrengroup.com
Chapter 7 Bankruptcy Filings in Mass. Soar To Highest Level in Four Years
Nearly 12,000 Bay State Residents Seek Chapter 7 Bankruptcy Protection;
Chapter 13 Filings Slide From 2008
BOSTON, Oct. 15 2009 – The number of Bay State residents filing for Chapter 7 bankruptcy protection jumped 35 percent in the first three quarters of 2009 from the same months last year, according to a new report by The Warren Group, publisher of Banker & Tradesman.
There were 11,872 Chapter 7 bankruptcy filings in Massachusetts from January through September, up 35.3 percent from 8,777 during the same months in 2008 and almost double the 6,229 filings during the same period in 2007. The number of filings for the first three quarters surged to the highest level for that nine-month period since 2005.
“A growing number of people are being forced into bankruptcy because job losses and salary cuts have made it difficult for them to pay their bills. Some have relied on credit cards to pay for even basic living expenses and now are seeking protection under bankruptcy law as a last resort,” said Timothy M. Warren Jr., CEO of The Warren Group.
Third quarter Chapter 7 filings totaled 4,098, a 34.1 percent increase from 3,055 in the third quarter of 2008 but 8.7 percent lower than the previous quarter’s 4,489 filings. A Chapter 7 bankruptcy filing is the most common option for individuals who are seeking relief from their debts and accounted for 82 percent of bankruptcy filings tracked by The Warren Group in Massachusetts during the third quarter of 2009.
People seeking Chapter 7 bankruptcy protection can eliminate most debt after non-exempt assets are used to pay off creditors. Even though there has been a significant increase in the number of Chapter 7 bankruptcy filings this year compared to the prior three years, the number of filings is below the level in the first three quarters of 2005.
Filings spiked in 2005 shortly before a federal law went into effect that made it tougher and more expensive for consumers to file for Chapter 7 bankruptcy protection. The law requires debtors to file under Chapter 13 if their income exceeds the median income in their state. While Chapter 7 essentially wipes away debt, Chapter 13 requires debtors to arrange for a three- or five-year debt repayment plan.
Chapter 13 bankruptcy filings in Massachusetts dropped 23.4 percent to 2,463 in the first three quarters of 2009 from 3,216 in the first three quarters of 2008, The Warren Group reported. There were 869 Chapter 13 filings in the third quarter, down 7.2 percent from 936 in the third quarter of 2008 and 5.4 percent fewer than the 919 filings in the previous quarter.
Data for every county in the state is available to members of the media by request.
About The Warren Group
The Warren Group, based in Boston, is the publisher of Banker & Tradesman, The Commercial Record and a series of association publications. As the premier provider of real estate data in New England, The Warren Group offers a range of real estate products and services for professionals and consumers searching for real estate and financial information. For more information about The Warren Group, please visit www.thewarrengroup.com or call 617-428-5100.