Bankruptcy claims for consumers and businesses are increasing. The total number of bankruptcy filings rose 5% in July 2019 from the previous month, the American Bankruptcy Institute said this week. There were 64,283 bankruptcy filings, compared to 62,241 for the same period last year.
There were 452,797 filings in the first seven months of 2019, up from 450,568 in the same period last year. There have been around 1,000 more consumer bankruptcies at this point this year, compared to the same point last year, the organization added.
Recent bankruptcy data shows that many consumer and business filings last month were from southern states. Alabama had the highest per capita rate, with 5.61 deposits per 1,000 people, followed by Tennessee (5.39) and Georgia (4.31), Mississippi (4.25) and Nevada (3.79).
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It is a sign that people are taking more loans without the required financial stability or that they have been affected by an unforeseen life event like illness or job loss. (People are twice as likely to file for bankruptcy if their health insurance has been cut off.)
Americans spend more. Consumers had $ 14 trillion in household debt in the first quarter of 2019, according to data from the Federal Reserve Bank of New York, compared to about $ 13 trillion in debt that consumers withheld in 2008.
Some good news: The increase in bankruptcies – a legal process that gives cash-strapped debtors a fresh start while paying their creditors – is coming at the lowest in 10 years. There were more than 770,000 bankruptcy filings in 2018, compared to 1.6 million in 2010.
“Congress recently passed legislation that will provide better access to the financial fresh start of bankruptcy for struggling small businesses, veterans and family farmers,” said Samuel Gerdano, executive director of ABI.
The fall in bankruptcies over the past decade has coincided with a 10-year bull market and low unemployment as the economy recovers from the Great Recession and people regain confidence in the economy and in their ability. to repay their loans.