Bankruptcy Filings Down Nationwide, While City Filings on the Rise

August 17, 2012 (Press-News.org) In the midst of the recession, bankruptcy filings rose steadily across the country, evidencing the struggle many Americans were facing as a result of the economic downturn. As the effects of the recession have waned, there has been a corresponding drop in the number of bankruptcy filings nationwide.

The drop was most noticeable during the first quarter of 2012, when bankruptcy filings fell between 8 and 10 percent from the year prior. As the American Bankruptcy Institute reported to The Honolulu Star, one of the reasons for the decline is the low interest rates across the country, which have allowed both individuals and businesses to "refinance their debt and strengthen their balance sheets."

According to Credit Union Times, bankruptcy filings were down significantly during the period from June 2011 to June 2012, compared to the 12 months prior. The Administrative Office of U.S. Courts reported filings dropped 14 percent during that period.

Both Chapter 7 and Chapter 13 filings were down during the period from June 2011 to June 2012. Chapter 7 bankruptcy is the most widely used method of obtaining bankruptcy protection -- it makes up 70 percent of all filings nationwide. During that one-year period, Chapter 7 filings dropped 16 percent. Chapter 13, the second most common type of bankruptcy protection, fell 11 percent during the 12-month period.

Bankruptcies in Ohio Are Down Statewide

The number of Ohio bankruptcy filings has also decreased, according to Columbus Business First. Across the state, bankruptcy filings were down 16.8 percent in 2011. The Dayton area was no exception, as southern Ohio saw a 14 percent decline in bankruptcy filings.

A Capital University Law School professor attributes the decline in Ohio to a number of factors, including increased access to credit and fewer foreclosures in the state.

While these statistics show many consumers and businesses appear to be on the mend financially, recently many experts have noted a troubling trend of cities filing for bankruptcy protection.

More U.S. Cities Filing for Bankruptcy

During a two-week period in June and July 2012, three California municipalities filed for Chapter 9 bankruptcy. Stockton, Mammoth Lakes and San Bernardino all sought bankruptcy protection as they faced rising debt and concerns about funding their payroll.

Stockton, the biggest city in California to ever file for bankruptcy, faced a $26 million deficit -- San Bernardino, a $45.8 million deficit.

Some attribute the rise in municipality bankruptcy filings to the aftereffects of the economic downturn. NBCLA, an NBC affiliate, notes that a large part of the reason San Bernardino faced a looming deficit was "a loss of $16 million in tax revenue," as "people who aren't paying their mortgages usually aren't paying taxes to the city either."

Municipalities have been able to file for Chapter 9 bankruptcy protection since 1937, when the provision was added to the U.S. bankruptcy code. Since that time, around 500 municipalities have sought bankruptcy protection under Chapter 9.

For the many Americans who are still struggling with financial difficulties, filing for bankruptcy protection can be a positive step toward getting back on solid ground. A knowledgeable bankruptcy attorney can ensure the appropriate steps are taken to improve your financial circumstances.

Article provided by Cope Law Offices, LLC
Visit us at www.copelawoffices.com