Bankruptcy filings drop in first half of 2012
According to recently released federal data, the number of bankruptcies filed in the first half of 2012 was significantly lower than the number of filings made during the same time period last year. In fact, both consumer and business bankruptcy filings fell to levels that were last seen prior to the economic recession in 2008. If these numbers remain constant through the end of the year, they may indicate that the national economic picture is, slowly but surely, improving.
There were 631,130 bankruptcy filings made in the first six months of 2012, a 14 percent decrease from the number of filings in the first six months of 2011. Specifically, 601,184 consumers filed for Chapter 7 or Chapter 13 bankruptcy, a 13 percent drop from last year, and 30,946 businesses sought Chapter 11 bankruptcy protection, a 22 percent decline.
According to Samuel Gerdano, the executive director of the American Bankruptcy Institute, the decrease is likely due to low interest rates. Since the economic recession began, the U.S. Federal Reserve has worked to keep interest rates low, he says.
If bankruptcy filings continue at the current momentum, about 1.2 million people will seek bankruptcy protection by year-end, as well as 60,000 businesses. This means that, while the decline is certainly good news, there are still thousands of Americans that are still struggling with insurmountable debt, bankruptcy and foreclosure. This is especially true in Georgia, which has continually been near the top of the list of states with the highest numbers of bankruptcy and foreclosure. Hopefully, these downward trends continue, both in Georgia and across the country.
Source: Reuters, “U.S. bankruptcies on pace to fall to pre-2008 level,” July 5, 2012