The Decline in Bankruptcy Filings

Oddly enough, bankruptcy rates have continued to decline in recent years. Although the United States has not yet overcome the economic downturn that occurred several years ago, it remains that the rate at which people are filing for bankruptcy is continuing to drop at a noticeable rate.

If the United States continues on the trend that it has been following for the past several years, bankruptcy rates will continue to decline. Statistics for the first quarter of 2012 show that this is going to remain true for this year, when compared to the numbers of last year. Last year, bankruptcy filings were reported to hit 355,000 for the first quarter of 2011-which was down from the previous year-but after coming to an end of the first quarter for 2012, it was shown that only 312,000 bankruptcy petitions were filed, which correlates to a drop of 12%. This drop in bankruptcies follows an overall drop of 12% from 2010 to 2011, as well, as 1.37 million bankruptcy filings were recorded in 2011, compared to the 1.55 million in 2010.


Some speculate that these numbers are misleading, however. Since we are not quite out of the economic crisis that began several years ago, and since many people still remain unemployed, these reported numbers may be falsely optimistic. David Jones, the president of the Association of Independent Consumer Credit Counseling Agencies, has many reasons to think that this is simply the calm before the storm, explaining this phenomenon with the rationale that, -I believe there's a bubble out there. When it does burst, there's undoubtedly going to be a cascade of bankruptcies.- Jones explains that these statistics are not indicative of the fact that people are still dealing with serious financial issues, because calls continue to pour into his counseling agencies from people seeking assistance with their dire financial problems.

Certain states have continued to lead the nation in bankruptcy filings, and although the overall average has begun to drop, the numbers of bankruptcies that some states are facing are still at an elevated level. California has famously led the country in the number of bankruptcy petitions filed in the state, with 51,000 already in the first quarter of 2012. Although this is down from 2011, when 63,000 filed within the first quarter, these numbers are still high compared to states like Texas, New Mexico, New York, and South Carolina, who receive a severely lower number each year.

Many remain optimistic about this trend in bankruptcy, however. Some predict that the numbers will continue to drop by 4% to 5% each year, as loosened credit conditions are continuing to make it easier for people to avoid filing for bankruptcy. This means that consumers are now able to gain access to larger lines of credit, and in turn, might be one of the direct causes of this bankruptcy decline. Although we might continue to see this incremental drop for the next several years, for some people, bankruptcy is still a very necessary and viable option. If you are faced with a dire financial situation and have run out of options, do not hesitate to seek the assistance of a knowledgeable somekeyword as soon as possible.