Personal Bankruptcy Filings Drop
Has the Illinois economy fully recovered? A recent article in Business Wire reported that U.S. personal bankruptcy filings have dropped to their lowest level in seven years (essentially, since the recession began), but does this mean we’re all back on our feet financially speaking? The data on personal bankruptcies came from a Fitch Ratings Report, but according to the article, it doesn’t necessarily mean that Chicago residents are feeling comfortable in terms of consumer finances.
Decline in Consumer Bankruptcies
According to the Fitch Ratings Report, consumer bankruptcies are “12 percent lower year-over-year through mid-August.” And Fitch currently projects that the total number of filings for 2014 will “fall below one million for the first time in seven years.” This is the fourth year in a row in which the number of personal bankruptcies has declined. Is the economy the sole factor?
The Fitch Senior Director Steven Stubbs suggested that a major reason for the decline is “the continued improvement in the labor markets.” Indeed, unemployment across the country was at around 6.2 percent in July of this year, which was “15 percent lower year-over year and 38 percent below the recession high of 10 percent.” In other words, more people have jobs, and as a result, they’re not filing for bankruptcy.
But is something else going on, too? According to Stubbs, “fiscal prudence” may also be a primary factor in the low level of personal bankruptcy filings. In short, consumers are afraid to spend money. Many don’t want to use credit cards even if they have them, and they don’t want to risk taking out loans when they don’t feel the economy is secure. Stubbs emphasized that “consumers are clearly more reluctant to take on greater amounts of debt despite the labor market improvement.” Indeed, he said, “wage growth is not keeping pace with the labor market.” To be sure, “there are still a high number of discouraged workers, which is also driving consumer consumption demands.” If bankruptcy filings are down but consumer consumption isn’t on the rise, is there trouble ahead for the economy?
Assessing the Numbers in Illinois
While the underlying reasons for the Fitch ratings may not all point toward economic recovery, Stubbs does suggest that the overall decline in personal bankruptcy filings is a good thing. But what are the numbers like in the Chicago area?
By the beginning of summer 2014, business bankruptcy filings in the Northern District of Illinois had dropped by about 5.5 percent, which is approximately half of the national rate. That’s a total of about 54,000 bankruptcy cases, which is down from nearly 57,000 in 2013. Chapter 7 filings dropped by 13 percent (from about 800,000 cases in 2013 to approximately 700,000 in 2014). Chapter 13 filings, however, barely showed a decline. Between 2013 and 2014, Chapter 13 filings dropped by less than one percent in Illinois, and those filings actually rose in certain districts.
Do you have questions about filing for consumer bankruptcy in Chicago? Despite the fact that the economy has been recovering, many Oak Park residents continue to struggle with significant medical debt and credit card bills. Depending on your situation, filing for Chapter 7 bankruptcy or Chapter 13 bankruptcy may be able to help alleviate the anxiety you’re experiencing because of your debt burden. Contact an experienced Chicago bankruptcy attorney today to learn more about how we can assist with your case.
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