Regional Bankruptcy Filing Increase: Southern District of Mississippi

The Southern District of Mississippi experienced a bankruptcy filing spike during the first half of the year.

July 21, 2017

The Southern District of Mississippi is reporting a filing increase of 13.1% for the first six months of 2017 (as compared to the same period in 2016). The district’s filing changes are as follows:

  • 6.9% increase in Chapter 7 bankruptcy filings (1844 to 1971), and
  • 21.8% increase in Chapter 13 bankruptcy filings (1459 to 1777).

(Chapter 11 bankruptcies dropped by 36% for the same period.)

The increase in Chapter 13 bankruptcy filings is notable, primarily because the majority of people prefer to file for Chapter 7 bankruptcy if they meet income qualifications. The reasoning behind this tendency is relatively straightforward—the debtor (the person who files the bankruptcy) isn’t required to repay creditors under this chapter.

By contrast, a debtor filing for Chapter 13 bankruptcy will often do so to protect valuable property, something Chapter 7 bankruptcy filers usually don’t possess. Also, a Chapter 13 debtor must have sufficient income to pay into a three- to five-year repayment plan. Therefore, the increase in Chapter 13 bankruptcies seems to suggest a growing area economy is strengthening the income of residents.

The increase is further notable because bankruptcy filings have decreased year after year in the United States since 2012. Below, for illustration purposes, you’ll find the total filing figures reported by the Administrative Office of the U.S. Courts for years ending June 30, 2013-2017:

  • 2013—1,137,978
  • 2014—1,000,083
  • 2015—879,736
  • 2016—819,159
  • 2017—796,037

One school of thought is that the overall decrease in consumer bankruptcy filings (cases in which the majority of debt isn’t business-related) is at least partially due to the widespread availability of health coverage under the Affordable Care Act. This theory seems to be supported by the fact that fewer people are turning to bankruptcy to discharge (wipe out) medical debt.

Effective: July 21, 2017