Is the Flood of Personal Bankruptcies Finally Receding?
Fallout from the housing collapse of 2008 is still creating a hefty paper trail in personal bankruptcies, though May saw a significant slowdown in individual filings for the first time in several months. According to the American Bankruptcy Institute and The National Bankruptcy Research Center, the number of consumer bankruptcies filed declined by nearly 14.8% to 114,803 in May from a month earlier. Filings have fallen some 15.7% compared to last May, and are down a total 8.6% from last year through the first five months of 2011.
This news comes as a relief given home prices that continue to plummet and a housing market that is stricken with inanition due to the prevalence of foreclosed homes on the selling block.
Last year represented a dubious milestone for personal bankruptcy filings, as a record 1.5 million Americans sought legal reprieve for their debt-burdens in 2010, the most on record since legislative reforms in 2005 that made it more difficult to file.
According to the WSJ the good news is not limited in scope. “The drop in filings has even begun to extend to some of the areas hardest hit by the bankruptcy boom. Nevada has had the largest number of bankruptcies per capita so far this year, but there have been signs of improvement. Compared to 2010, bankruptcies have declined by 17% in the state, according to an analysis by Mr. Mann. Filings have also declined sharply in Vermont, West Virginia, Washington, D.C. and Iowa. They continue to rise rapidly in Delaware and Utah.”