Bankruptcy Filing Rate Continues to Decline

Law Professor Robert Lawless of the University of Illinois has posted a short article on CreditSlips.com regarding the declining bankruptcy filing rates for the first part of 2014. Lawless sites data collected by Epiq Systems, a provider of technology products and services for the legal profession, that shows that the “decline is part of a longer-term trend[.]”

The annual bankruptcy filing rate is now 3.08 bankruptcies per 1,000 persons, the lowest rate since 1990 (ignoring 2005 when bankruptcy rates spiked, then plunged due to changes in the bankruptcy laws). The bankruptcy filing rate has declined for forty-three straight months. Lawless projects that bankruptcy filings will reach just over 900,000 for 2014, down from 2010 when over 1.5 million cases were filed.

Professor Lawless postulates that this downward trend is due to the “availability of bankruptcy alternatives and very little to do with overall economic conditions.” Government programs like HAMP and looser lending restrictions may allow individuals to restructure their personal finances without filing bankruptcy.

Bankruptcy remains a viable tool for reorganizing finances in a permanent and long-term way. Through bankruptcy, an individual may eliminate unsecured debts, like a credit card or medical bill, and modify or “walk away” from secured debts, like a house or car loan. If your finances are sick, the fresh start offered by the federal bankruptcy law may be the right medicine. Get a free consultation today and learn how bankruptcy can help you and your family.