• 04
  • October
    2011

A recent Wall Street Journal article noted that personal bankruptcy filings continued to decrease in September, at 108, 517 filings across the country. According to an a Tuesday announcement by the American Bankruptcy Institute and the National Bankruptcy Research Center, 17 percent fewer consumers filed for bankruptcy compared to the same month last year.

The number of bankruptcy filings in September is 4 percent less than the number filed in August, though the numbers did not account for seasonal changes. In addition to the continued monthly decreases, the number of consumer bankruptcies in 2011 is 10 percent below the number over the same period last year. Experts project that the total number of consumer filings for 2011 will be less than 2010 numbers.

In 2010, personal bankruptcy filings reached 1.5 million, which was the highest number since the 2005 changes to federal bankruptcy law. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 increased the difficulty of filing for Chapter 7 bankruptcy and caused an immediate decline in the number of bankruptcies filed, though numbers have increased since the economy has turned south.

The law, which intended to direct more debtors into Chapter 13 bankruptcy, did not exactly achieve its goal. The majority of filers still opt for Chapter 7, which allows consumers to liquidate their assets, pay what they can to consumers, and have the rest forgiven.

According to Samuel Gerdano of the American Bankruptcy Institute, the decreased number of filings is related to an increased number of consumers who are taking control of their spending and use of credit.

Source: Wall Street Journal, "Personal Bankruptcies Decline," Sara Murray, Oct 4, 2011.