Who can file for bankruptcy? The answer is simple! Any “person” who is seeking financial relief from his or her creditors. Section 101(41) of the United States Bankruptcy Code states “. . . ‘person’ includes individual, partnership, and corporation…” This means that in addition to individuals, large corporations and businesses can also file for bankruptcy in order to manage their debts and protect their assets.
While the big headline bankruptcies that include American Airlines, General Motors, and even Hostess [the beloved makers of the Twinkie get all the attention, the vast majority of filings are attributed to ordinary American consumers seeking debt relief. According to the Administrative Office of the U.S. Courts, 1,410,653 bankruptcy cases were filed in the United States in 2011. Of that number, 47,806 filers were businesses, while the other 1,362,847 [over 96.5%], were non-business consumer bankruptcies.
This includes your neighbor down the street–to Mike Tyson, Donald Trump, President Lincoln, Lenny Dykstra, Toni Braxton and everyone in between.
It is important to understand that in today’s economy many Americans are finding themselves increasingly dependent on credit to make purchases. This naturally leads to increased debt. While some bankruptcy filers have simply overextended their means, there are many unexpected reasons that cause debtors to spiral further into debt. If you find yourself amongst those people considering bankruptcy, know that you are not alone.