Around 800,000 people filed for bankruptcy protection in 2015. That is actually good news!
Population-adjusted, the bankruptcy filing is at historic lows. On an annual basis, there are now 2.65 filings per 1,000 persons. This is the lowest it has been in 26 years, excluding the surge when new laws were enacted. There now have been 57 straight months of year-over-year declines in the bankruptcy filing rate.
Experts believe there are several reasons for this. One is the legal reform that has made it more difficult to qualify for bankruptcy protection. Lower interest rates and better consumer-friendly options like debt management plans have also helped.
The leading cause of bankruptcy filings is related to outstanding medical expenses associated with an injury and the loss of income while out of work. Other factors are reduced income, job loss, divorce and excessive credit card debt.
Tragically, studies show that senior citizens are declaring bankruptcy more frequently than other demographics. And 16% of all bankruptcy cases are repeat filers. Studies also show that the majority of filers have incomes of less than $30,000 per year.
If you find yourself struggling, concerned about mounting debt pressures, I want you to consider a debt management plan before turning to bankruptcy.
