When an individual can no longer manage to keep up with debt payments, filing for bankruptcy can prevent aggressive debt collection practices like wage garnishment and even excessive phone calls. Bankruptcy usually discharges, or voids, all of the debt associated with the filer.

According to recent records in U.S. bankruptcy courts, the number of bankruptcy filings in 2012 has been decreasing. These statistics apply to non-business filings, such as Chapter 7 and Chapter 13. Wisconsin readers may be interested to know that from Sept. 30, 2011, to Sept. 30, 2012, Chapter 7 filings dropped by almost 16 percent nationwide. Chapter 13 filings dropped by about 10 percent during that period. Non-business bankruptcy filings dropped by 14 percent total.

This data shows that Chapter 7 bankruptcy filings are the most popular filings. States leading in bankruptcy filings include Tennessee, Georgia and Nevada. The District of Colombia, North Dakota and Alaska see the fewest annual filings.

Forecasters predict that the reduction in bankruptcy filings as well as historically low rates of consumer credit defaults may negatively impact debt collection companies, which charge consumers money to help them clear their credit reports of negative entries.

There are many instances that could result in a responsible individual needing to file for bankruptcy protection. For example, large medical bills, a job loss or other personal problems may make it impossible for a person to make payments on their unsecured debt. People deserve to be able to try and manage their debts without being harassed by creditors.

Source: Huffington Post, “Bankruptcy Filings Down in 2012, Continued Bad News for Debt Relief Industry,” Steve Rhode, Nov. 7, 2012