Bankruptcy Filings are Decreasing
Most of us know someone who has been dealt some difficult financial blows over the last decade or so. People have lost jobs and homes and many have had to take advantage of bankruptcy to get their lives back on track, with the peak number of filings happening in 2007. The good news is, fewer people have been filing bankruptcy over the last few years. Between 2008 and 2011, there was a sharp decline each year. Now, the decline has slowed, and overall filings dropped by 10% 2014 to 2015 for all chapters and types of bankruptcy. There were more consumer Chapters 7 and 13, while Chapter 11 filings increased by 2%. With these changes, the total number of bankruptcy filings has decreased to the lowest number since 2006. In 2015, the average per capita bankruptcy-filing rate was 2.63, or 2.63 people out of every 1,000. The economy can be somewhat unpredictable, and with increasing interest rates, it remains to be seen how 2016 will pan out.
Why are Numbers Decreasing?
Even from an informal survey of people you know, you can probably tell that overall, our economy is turning around, although it may not feel like it to some individuals. There also seems to be a shift in thinking for many Americans, with trends in “tiny houses” and simple living. This can be especially true for people who have suffered financially and learned that money and material possessions just aren’t necessary for happiness; life is much more peaceful with less debt and less “stuff.”
Also, many people who needed to file bankruptcy due to excessive debt or unexpected changes to life circumstance have already filed. They know that once they file, that chapter of their life is over and they can proactively rebuild their credit. This is just a matter of numbers, and there may be fewer people left who still need to file bankruptcy.
People have also been able to avoid bankruptcy by working with creditors and making lifestyle changes. Creditors now have more experience dealing with people in debt and may offer better payment plans or other debt relief options. Many medical facilities have funds set aside to help with medical bills, often allowing them to write off debts completely. From watching friends deal with mortgage companies, people know that foreclosure proceedings move very slowly. It could be possible that people take advantage of this time to get their finances in order rather than moving quickly toward bankruptcy. People may also have seen their friend struggle to overcome the lowered credit score that bankruptcy causes. This prompts some people to work a second or even third job to pay off debt and avoid having a bankruptcy on their credit report.
It’s Not Too Late
If you’ve been putting off bankruptcy and continue to struggle to keep up with debt, it may be time to get serious and take action. Whether it’s tightening your budget to get a handle on your debt or taking the plunge into bankruptcy, you don’t need to live with the stress of unmanageable debt. As soon as you file, the automatic stay begins, and you’ll be free from calls from creditors, foreclosure proceedings, and debt-related lawsuits. I’m here to help you sort through all your options and make a plan to get your life back.
