Bankruptcy filings continue decline
As the economy continues to recover, however slowly, instances of personal bankruptcy are down.
This post comes from partner site Credit.com.
Economic conditions are improving significantly nationwide -- and because of this, fewer consumers are in such dire financial straits that they need to seek protection from their creditors.
The first three months of 2012 lent a lot of credence to earlier predictions that bankruptcy filings would fall considerably throughout this year, according to new data from Fitch Ratings. In the first quarter of the year, bankruptcies are about 8% or 10% lower than they were during the same period in 2011, though that rate is expected to level off soon. Banks are once again broadening credit standards and therefore allowing those with iffier borrowing histories to access loans, which in turn increases credit risk.
By year’s end, it’s likely that bankruptcies will have fallen between 4% and 5% on a year-over-year basis, the report said. However, the rate of improvement in bankruptcy filings made nationwide between 2010 and 2011 will be nearly impossible to match.
Lenders may already be seeing these effects take hold. The number of filings nationwide rose 19% between January and February alone, according to the most recent data from the American Bankruptcy Institute. In addition, the number of filings per day -- February had only 29 days compared with January’s 31 -- rose 27%. However, those figures were still 5% below the rate observed last February.
Some of these filings may have been the result of lingering economic effects, the report said. (Post continues below.)
"The stagnant housing sector and high unemployment continue to stress the cash flow of consumers and businesses," said Samuel Gerdano, the executive director for ABI. "As consumers and businesses work to shed tremendous debt loads, there are times when bankruptcy is the only shelter to provide financial relief."
Many consumers sought bankruptcy protection during the recent recession, and many experts have said that at some point these would have to reach a nadir; there are only so many people whose financial situations are difficult enough that they need to file for bankruptcy protection. Consequently, as with credit card charge-offs or foreclosure proceedings, there had to be a logical point at which financial troubles would begin to move in the opposite direction after a considerable amount of hardship suffered by consumers nationwide.
More from Credit.com and MSN Money:
- Pay down student loans by . . . shopping?
- Hey! Get out of my Face(book)
- 4 things to know about peer lending
- Canceled student loan debt brings tax nightmare
- Calculator:Do you have too much debt?
- 5 credit card strategies from 'The Walking Dead'
Copyright © 2013 Microsoft. All rights reserved.
Quotes are real-time for NASDAQ, NYSE and AMEX. See delay times for other exchanges.
Fundamental company data and historical chart data provided by Thomson Reuters (click for restrictions). Real-time quotes provided by BATS Exchange. Real-time index quotes and delayed quotes supplied by Interactive Data Real-Time Services. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by SIX Financial Information.
ABOUT SMART SPENDING
Editor Bev O'Shea lives and works in the foothills of the Appalachians. A former copy editor for The Atlanta Journal-Constitution and the Orlando Sentinel, she joined MSN Money in 2007. She's a fan of sunsets, college football and free shipping, among other things.
Having worked as a writer, reporter and editor for more than 25 years, Editor Julie Tilsner is the sort of person who can't help but correct grammar in Facebook postings and on billboards. She's written for BusinessWeek, the Los Angeles Times, Parenting, Redbook, AOL and others. She lives in Los Angeles County with her family and loves to drink wine and practice yoga, although not generally at the same time.
A writer for MSN Money since January 2007, Donna Freedman won regional and national prizes during an 18-year newspaper career and earned a college degree in midlife without taking out student loans. She also writes about smart money tactics for magazines and on her own site, Surviving and Thriving.
Mitch Lipka has been warning people about scams and shining light on questionable business practices for more than 20 years. Mitch, the consumer columnist for The Boston Globe, has also been a reporter and editor at The Philadelphia Inquirer, Consumer Reports, South Florida Sun-Sentinel and AOL. He won the 2010 New York Press Club award for best consumer reporting online and was honored in 2011 for his reporting on child product safety.
Marilyn Lewis is an award-winning writer with a passion for getting readers clear, straight information that helps them stay out of financial trouble. A former reporter for The San Jose Mercury News, she works from her home in Port Townsend, Wash. Contact her at MarilynLewis@Outlook.com.
LATEST BLOG POSTS
A single mom who says she was forced to accept a fee-heavy 'payroll card' instead of a check or direct deposit is taking a McDonald's franchise to court.