There has been a continued drop in the number of bankruptcy filings over the last several months. While a closer examination of bankruptcy statistics reveals interesting filing patterns over the past few years, there has not been enough time for anything more than speculation as to the cause of the recent decline.
In 2005, some significant changes were made to the bankruptcy code that left an impact on the filing patterns. Although filings, especially for Chapter 7 cases, dropped off for a while thereafter there was a reemergence to pre-2005 levels within a matter of a few years. When the recession hit hard in 2008, filings spiked again. Since then the economy hasn’t let up much and many people are no better off, or even worse, than in 2008. What does this mean?
There are two possibilities: (1) more Americans are gaining a better understanding of how to prepare for financially tough times and (2) the economy has at least changed to give more flexibility within the recession. Although no one sets out to end up needing bankruptcy protection, unforeseen circumstances do arise that can prompt financial hardships. More Americans are seeking debt resolution and management options much sooner than in the past. Credit counseling and debt negotiation companies have made a huge impact in helping resolve debts before the need for bankruptcy strikes. Further, even minor economic improvement, such as a decrease in the unemployment rate, are making a significant impact in the lives of many.