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PERSONAL BANKRUPTCY FILINGS

Personal bankruptcies totaled 1.45 million in 2001, up from 1.22 million in 2000. And more recently they rose 15 percent to top 1.5 million filings in 2002. Personal bankruptcy filings have been steadily increasing over the past few years and seem likely to continue to do so. This surge in cases underlines both a current downswing in economic opportunities as well as the extreme importance of managing your personal finances responsibly in both good times and bad alike.

Whereas debt itself was once seen as a financial burden, it has become more of an everyday reality in modern life. Debt has actually become a central feature of our culture- there seems to be no avoiding it. But the different ways of managing existing debt can determine the outcome of your personal finances and make the difference between recovery from debt and inability to meet your debts. Although sometimes the situations that lead to bankruptcy develop beyond personal control, learning to manage your credit and live according to a sensible budget will ensure a more secure financial record so you can either avoid bankruptcy or re-build your assets after bankruptcy.

You may have noticed that personal bankruptcy filings have been given a lot of space in the news as of late. Given the increasing number of personal bankruptcy filings, many proposals have been made over the past few years to attempt to control the spiraling rate of bankruptcy cases, and while they might not have an effect upon you right now, it's important to know some of the ways in which courts are considering a new management of the bankruptcy system. For example, some proposed laws might mean a new power on behalf of the court to determine whether or not your are eligible for Chapter 7 bankrupcy . Chapter 7 currently accounts for 70% of all bankruptcy cases. Proposed legislation for a bankruptcy reform act would seek to move more people into filing chapter 13 instead of chapter 7 so that individuals will be accountable for partial repayment more often than is now the standard. New suggestions mention a "cut-off" point for any debtor who is determined as having sufficient income to repay at least 25% of owed debt over five years or as having at least the median income for the state in which the case is filed. Under such a law, anyone who meets these guidelines would automatically have to file chapter 13 instead of chapter 7.

Currently, though, if you have weighed all your options and you have determined that filing personal bankruptcy is the only way you can solve your personal financial problems, you can apply for either chapter 7 or chapter 13 bankruptcy. Each of these offers different ways for you to gain relief from financial pressure by either discharging your debt or re-organizing it. Getting the right information about each is essential to making the decision that will be best for you in the long run.

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