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Bankruptcy Law Blog

Sunday, August 20, 2017

What is Normal?

One of the questions a lot of our clients ask is whether their particular situation is normal. Our response is almost always yes. Most people coming to us are filing bankruptcy because they have medical debt, credit card debt, a bad mortgage, or just got divorced. But even people that file bankruptcy for other reasons are normal because there isn’t really anything too weird to surprise us. We’ve seen it all.

If you really want to know how your bankruptcy compares to other peoples’ bankruptcies, however, there are government statistics that you can take a look at.

According to the latest report, in the United States as a whole, nearly 750,000 consumer bankruptcies were filed last year. 25,549 of these cases were filed in Alabama.

Alabama filers reported having over $1.5 billion in assets and $2.4 billion in liabilities. This works out to an average of $61,000 in assets and $95,000 in liabilities per filer, which is typically an individual or a family.

Debtors in the Southern District of California and in the Northern District of California reported the highest average assets per petition at $344,000 and $224,000, respectively. Filers in the Western District of Tennessee reported the lowest average assets, $43,000.

Excluding districts with fewer than 200 case filings each, debtors in Western District of Washington reported the highest average liabilities per filed petition at $8,348,000. However, this data is skewed by one debtor in the district who reported total liabilities of $85,122,168,563. Filers in the Western District of Tennessee had the lowest average liabilities at $65,000.

Nationwide, and in Alabama, approximately 61% of all consumer bankruptcy cases were filed under Chapter 7, which allows a debtor to liquidate their assets to pay off debts, then have most other debts forgiven. Around 39% of the cases were filed under Chapter 13, which requires the debtor to enter into a multi-year debt repayment plan that is supervised by the court.

In Alabama, 56% of the people that filed under Chapter 13 were able to pay off all of their debts.

The median average monthly income reported by all debtors across the United States was $2,668 (1 percent higher than in 2015), and the median average reported monthly expenses were $2,590 (less than 1 percent higher than in 2015). Filers in the Northern District of California had the highest median average monthly income with $3,500, and filers in Puerto Rico had the lowest median average monthly income with $1,848. Filers in the District of Connecticut had the highest median average expenses with $3,520, and filers in Western District of Tennessee had the lowest with $1,720.

In Alabama, the median average monthly income reported by filers was between $2,212 and $2,493, depending on what part of the state the filer was from. Median reported expenses were between $2,042 and $2,258. We can’t say for sure what the exact average for the whole state is because the data the government released is reported by bankruptcy district, not the state as a whole.

Bankruptcy filers who really want to know how they compare to others can get a decent idea by looking at this data, but it is important to remember that every bankruptcy is unique. Our firm knows no bankruptcy is exactly the same as another, so we treat our clients like their case is special, not just another statistic.

 


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Padgett and Robertson assist clients with Bankruptcy, Personal Bankruptcy, Consumer Bankruptcy, Chapter 7 Bankruptcy, Chapter 13 Bankruptcy and The New Bankruptcy Law in Mobile, Alabama and throughout southern Alabama. Alabama State Bar Association Regulations require the following: "No representation is made that the quality of the legal services to be performed is greater than the quality of legal services performed by other lawyers." 11 U.S.C. 528 of the U.S. Bankruptcy Code requires the following: "We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.”



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Alabama State Bar Association Regulations require the following: "No representation is made that the quality of the legal services to be performed is greater than the quality of legal services performed by other lawyers." 11 U.S.C. 528 of the U.S. Bankruptcy Code requires the following: "We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.”