New Study Shows that Bankruptcy Filings May Dip Below Pre-Recession Lows
A joint study conducted by the American Bankruptcy Institute (ABI) and Epiq Systems shows the number of both commercial and noncommercial bankruptcy filings fell during the first half of 2012. Overall bankruptcy petitions fell 14 percent during the first half of the year, and those entities and individuals that filed for protection under bankruptcy law declined from 731,500 to 632,130 during the same period in 2011. Commercial filings experienced the sharpest decline, dropping 22 percent during this period to 30,946 from 39,598.
TN Bankruptcy RateThe study also showed that noncommercial court proceedings dropped from 691,902 to 601, 184, representing a drop of 13 percent. The final noteworthy statistic from the report indicates that almost 100,000 bankruptcy filings in June revealed an 18 percent decline from 2011.
Analysts say the steady declines may stimulate bankruptcies to fall to pre-recession levels by the end of the year. The ABI attributes the declines to consistently low-interest rates, “which have made it affordable for businesses and individuals to seek out affordable and manageable loans.” The report notes that the Federal Reserve has promised to keep rates low through 2014 and possibly through 2016, depending on economic conditions.
Despite the decline in bankruptcy filings, several large corporations, including Hostess, American Airlines, and Houghton-Mifflin, were still forced to file for bankruptcy this year. A number of corporate entities, however, have emerged from court proceedings “intact and with solid restructuring agreements.”
The Executive Director for the ABI says the U.S. is on pace to have the lowest total bankruptcies since before the financial crisis in 2008, and with sustained low-interest rates and weak consumer spending, bankruptcies should stay at relatively low levels through the end of 2012.
Bankruptcies have also fallen in Chattanooga because people have found obtaining credit much more difficult in the past few years, keeping their overall debt lower. However, with a new round of foreclosures being unleashed, we expect many people to need help in keeping their homes, for which bankruptcy is a powerful tool.
For any individual, accumulating any amount of debt can often feel overwhelming, but it can be especially burdensome if the debt amount is very large. The bankruptcy lawyers in Chattanooga with Massey & Associates, P.C. understand how hard facing financial difficulties can be and can discuss with you any and all of your legal options to get you on the road to financial recovery. For a complimentary consultation, please call (423) 697-4529.
