Consumer Bankruptcy Falls Despite Increased Debt

April 17, 2013 - Emerging data suggests that bankruptcy filings have declined steadily since 2012. This is a welcome relief from the avalanche of distress the country was in between 2008 and 2010. In the last year alone, the number of Americans who are filing for bankruptcy has dropped by 10 percent, according to the American Bankruptcy Institute. To put this in perspective, during the entirety of the previous calendar year, consumer bankruptcy filings decreased from 83,022 in January of 2012 to 74,743 in January 2013.

Monthly fluctuations have occurred lately, however, as the total number of bankruptcy filings as of this January was 4% higher than in the fiscal quarter ending December 2012. Despite this up-and-down, bankruptcy filings are estimated to continue falling, given the current trend of low interest rates and decreased consumer spending.

Today's consumers appear to be erring on the side of caution regarding debts. Despite taking out a record number of student and auto loans, totaling over $950 billion and $750 billion respectively by the end of last year, individuals are paying them off quickly. This trend, in tandem with strong housing and equity markets-which would usually account for large quantities of revolving credit-is the reason that consumer bankruptcy cases in the United States will likely drop 6 – 7% or even more in 2013.

It's interesting to note, however, that regardless of this country's increased loan debt, consumer credit is actually going up. As recently as November 2012, the US reached almost $3 trillion in credit, which is several percentages higher than the nearly $2.48 trillion figure from November 2011. Non-revolving or fixed repayment credit from auto and student loans made up approximately $2 trillion of the almost $3 trillion total of money borrowed. The remainder of America's sky-high credit level is comprised of revolving credit, a sort of credit option without a fixed number of payments, such as credit cards.

The falling bankruptcy rate is good news for Americans, however many are still affected. Whatever the initial cause of one's personal financial situation, help is available from foreclosure, medical bill and credit card debt lawyers. Chapter 7 bankruptcy is an option to assist those in need in settling their debts through asset liquidation, and may relieve in-debt individuals of some costly repayments.

Georgia-based Chapter 7 Attorneys provides debt relief and bankruptcy solutions to state residents. Their services help to connect individuals with qualified debt relief and bankruptcy attorneys in Marietta, Kennesaw, Acworth, Woodstock, Smyrna, Vinings and Dunwoody, GA and surrounding areas. To learn more about Chapter 7 Attorneys and bankruptcy filing, contact Roger Ghai.