There has been much attention surrounding the drop in bankruptcy filings over the last year or so. Historically, filing patterns coincide with economic fluctuations and legislative changes. However, as the economy continues to struggle the decrease in filing patterns has many looking for answers.
The drop in filings is a good sign overall. It means that despite the unemployment rate hovering around 8.5%, people are still finding ways to resolve their debts without the need for bankruptcy. Personal debt burdens continue to remain a problem for the majority of Americans and default rates have yet to subside, but still filings decrease. Even more surprising is the fact that two of the largest contributors to bankruptcy filings remain a problem. Medical debt and student loan debts are taking over our nation, yet many people are finding ways around them. So what is behind these puzzling findings?
While bankruptcy remains a valuable option for many, the fact is that some people are simply finding other ways to resolve their debts. Debt negotiations have become increasingly popular as consumers seek lowered payments and lenders are willing to play ball rather than risk losing more money if the consumer does file for bankruptcy. Creditors are becoming more flexible with their repayment terms and offering borrowers help directly, whereas in years past they would have stubbornly refused.