Central Valley, Uncategorized

Bankruptcy rate doubles in Stanislaus


Modesto, CA / Bilingual Weekly

The National Bureau of Economic Research —the arbiter of the start and end dates of a recession in the United States, declared the recession that began in December 2007 ended in June 2009. But no one bothered to inform people in Stanislaus County.

Four thousand and 367 county residents have sought individual bankruptcy protection during the last 12 months. According to the latest bankruptcy report published this week by USCourts.gov showing bankruptcy filings up to September 30, 2010, the rate grew by a 14 percent from 2009. But the counties of Stanislaus, Tuolumne and Calaveras —served by the Modesto Division of the U.S. Bankruptcy Court— went from 6.89 per thousand in 2009 to 8.69… an increase of 26 percent and almost double of the national median.

The local culprits, unsurprisingly, are upside down home loans and unprecedented unemployment —16.4 percent by last August.

People file either Chapter 7 or Chapter 13 protection. People who have little or no income anymore, who have little or no personal property left file for Chapter 7. In this mode they can free themselves from creditors and unsecured loans such as credit cards and start anew… without credit. Chapter 13, in the other hand, is for people who have a lot invested in their property, who have an income but, obviously, not large enough to catch up with their growing debt. This protection gives the person between 3 to 5 years of relief to reorganize their finances and pay his or her debt in realistic installments.

According to a Modesto Bee article published last week, 80 percent of Stanislaus bankruptcy protections seekers opted for Chapter 7 whereas 18 percent chose 13. The balance was divided between the unusual Chapters 9, 11 and 12. Aging and Bankruptcy, Revisited, a study published in September 2010 by the American Bankruptcy Institute Journal, reveals that the fastest growth in bankruptcy filings occurred in those debtors between the ages of 55 and 64.

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