A couple of months ago, we wrote about the decreasing number of bankruptcy filings in the U.S. On the surface, it sounds like a great development. However tempting it is to jump to this conclusion though, it may not be the case. For example, just because fewer people are filing for bankruptcy does not mean they aren’t racking up debt in areas that can’t be addressed through bankruptcy. More specifically, student loan debt — which is extremely difficult to discharge through bankruptcy — is a massive problem for many people in the U.S. right now.
So do these numbers really forecast a bright economic future for Americans? Yes and no. It’s best to take the news with a grain of salt.
And with that in mind, there’s a new report out detailing the number of bankruptcies in the U.S. in 2013. Filings dropped 13 percent in 2013, and hit levels that have not been seen since 2007, just before the recession. In addition, the report found that bankruptcy filings have been declining since 2010.
This all sounds great, but there are still a couple of things to remember about bankruptcy. The first is that, even with this news, there were still 1 million people who filed for bankruptcy in 2013. There are still plenty of people out there who need bankruptcy to get back on an even financial keel. That leads into the second point, which is that even though bankruptcy is often portrayed as a problem, it really is a solution. Bankruptcy is a way for people to get rid of some (or all) of their debt and start a new chapter in their lives.
Source: Bizjournals.com, “Bankruptcy filings lowest since 2007; Tennessee biggest deadbeat state,” Kent Hoover, Jan. 6, 2014