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Bankruptcy filings in D.C. area drop

In a bit of good news for the region, a recently released report shows that bankruptcy filings are down in the Washington area during the first four months of 2012. The report was issued by the American Bankruptcy Institute, an organization that tracks commercial and personal bankruptcy filings.

More than 21,000 entities filed for bankruptcy during the first four months of 2012, a number that is down 8 percent from the year before. Virginia experienced a particularly large drop, with a rate that fell by 10.4 percent since 2011. The District of Columbia had the fewest total number of filings, with only 329 on the books in 2012 so far. It should be noted that more people live in the Virginia and Maryland suburbs of Washington than in the District.

The trend in the D.C. area reflects an overall drop in bankruptcy filings throughout the United States. Filings in April 2012 fell by a whopping 16 percent as compared to the year before. Personal filings in the nation totaled only about 100,000 during April.

Attorneys in the area say they are not surprised to hear of a drop in bankruptcy filings. They say that a decline has been pending since the height of the recession peaked in 2009, when businesses and individuals flocked to file bankruptcy documents. Experts say that the D.C. area tends to be insulated from downward economic trends because of the federal government support in the region.

But attorneys add that they are seeing an increase in Chapter 13 bankruptcy filings, which requires a restructuring of debts, rather than Chapter 7 bankruptcy, which arranges for all debts to be expunged and assets liquidated. This is particularly relevant for small-business owners who may have provided services to home construction firms. They have seen a recent uptick in business, which allows them to repay their debts more easily.

But no matter which method someone chooses, it's important that they know what they are getting into, and that they are truthful about the assets that they have.

Source: The Washington Post, "Bankruptcy filings down in region," Danielle Douglas, May 13, 2012

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