Bankruptcy continues it's downward slide for 2 consecutive years. In the year 2012, bankruptcy rate has dropped by 14 percent in almost 50 years of the country. Less than 1.2 million people filed bankruptcy in the previous year. This comes shortly after bankruptcy filings dropped by 12 percent in the year 2011.
Consumers have been forced to come out of the debt hole, either willingly or unwillingly. This has most probably lead to a fall in bankruptcy filing in the past 2 years.
Less number of people filed bankruptcy in 2012
Although the number of bankruptcy filings is still high in the country, yet it shows a sharp decline from the year 2010, when nearly 1.55 million people filed bankruptcy. The consumer debt level has also dropped. In the year 2007 and 2008, consumers had almost $1 trillion in credit card debt. However, in the year 2012 (till the month of November), consumers were carrying almost $858 billion in credit card debt.
The condition of the housing market is gradually becoming better with time. The unemployment rate has dropped after the improvement in the job market. People are getting jobs, earning dollars and paying off debts. Consumers of 2012 and 2013 are more financially aware than the previous years. They're now able to manage their finances in a better way. These factors have influenced the current bankruptcy rate significantly.
Consumer spending largely influences the progress of the economy. Usually, consumers spend more during the beginning and midst of a financial boom. When the economy of a country declines, consumers are unable to get jobs and fail to pay the credit card bill or reduce debt level.
Nevada had seen a good number of bankruptcy filings in the last few years. However, in the year 2011, bankruptcy filings dropped by almost 28 percent. This was the sharpest fall amongst all other states in the country. The only state, which didn't show a remarkable recovery, is South Carolina. The number of bankruptcy filings has dropped only by 1 percent in this state.
California ranks top with 180,000 number of bankruptcy filings in the year 2012. However, this figure is better than that of the year 2010 when there were nearly 255,000 bankruptcy filings. Florida ranks second with 80,000 bankruptcy filings in the same year. Illinois and Georgia both had 60,000 bankruptcy filings.
Tennessee had the highest number of per-capita bankruptcy filings. There were nearly 688 filings every 1000 residents. On the other hand, there were 6,43 bankruptcy filings in every 1000 residents in the states of Nevada and Georgia. Still, this figure is better than the year 2010. There were 11 filings per 1000 residents in Nevada.
Irrespective of the fact that bankruptcy filings have decreased in the year 2012, yet there are many individuals who are struggling to pay off their debts. Individuals try to get any job when they're unemployed. Often, they accept jobs with low pay scale just for the sake of earning some dollars. Needless to say, these individuals are facing huge problems in repaying debts.
Several individuals are approaching bankruptcy attorneys as they are struggling with mortgage payments. Some are opting for bankruptcy since non-profit debt settlement companies have not been able to help them out.
Instances are there when individuals have not been able to resolve their debt problems even after paying fees to the debt consolidation companies. They simply take the fees and don't bother to do anything. This is exactly why FTC banned debt settlement companies from charging advance fees.
No matter how much the economy of the country improves or how well the individuals manage debts, there will always be people who will file bankruptcy. However, in the year 2013, it is expected that bankruptcy rate will continue its downward slide for the third consecutive year.