Bankruptcy Filings Were Down In January But Does That Mean Things Are Improving?

The average nationwide per capita bankruptcy-filing rate for January was 3.41 (total filings per 1,000 per population), and the average total filings per day in January 2012 registered 4,397, a 14 percent decrease from the 5,109 total filings in January 2011. States with the highest per capita filing rate (total filings per 1,000 population) during January 2012 were:

1.      Tennessee (6.38)
2. Nevada (6.22)
3. Georgia (5.44)
4. Delaware (5.27)
5. California (5.13)

These are also States with very serious unemployment issues.  The American Bankruptcy Institute (ABI) predicts at least some stability for the remainder of 2012: “The continued decline in bankruptcies reflects the effort of consumers and businesses to shore up their debt loads in order to navigate through an uncertain economy,” said ABI Executive Director Samuel J. Gerdano. “We expect overall bankruptcy levels in 2012 to continue to trend downward until consumers increase household spending.”
That may very well be so and we hope it is.  However, there are still millions of consumers actually living on extended unemployment insurance payments and those will eventually end.  There are also a large number of families still in trouble with home mortgages.  We believe there is a “bubble” of potential personal bankruptcies on the horizon.  As the federal government begins to deal with the national debt, out-of-control spending, and revenue shortfalls, expect to see more consumers in serious financial difficulty.

David C. Jones, Ph.D.
AICCCA President