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Although still high in post-recession stress, US bankruptcy rates down from highs of 2010

In certain beleaguered areas, rates still rising


Nationwide the consumer bankruptcy rate continues to decline from its high point reached last year, although rates in some areas continue to rise.

Totals shows six per cent drop

According to a May 6 press release from the American Bankruptcy Institute (ABI), "The total number of U.S. bankruptcy cases filed during the first three months of 2011 decreased 6 percent over the same period in 2010, according to data released today by the Administrative Office of the U.S. Courts. Total filings reached 366,178 during the first calendar year quarter of 2011 (Jan. 1-March 31), a drop from the 388,148 new cases that were filed over the same period in 2010. The total filings in the 2011 first quarter also represent a 1 percent decrease from the 370,080 bankruptcies filed during the fourth quarter of 2010 (Oct. 1 – Dec. 31).

“ 'The drop in bankruptcy filings demonstrates the continued effort of both consumers and businesses to decrease their debt loads and shore up their finances,' said Samuel J. Gerdano, ABI Executive Director.  'We expect that bankruptcy filings for 2011 will fall below last year’s total of 1.5 million.' ”

Midwest ranked tops in fiscal fitness

The best area for "fiscal fitness" seems to be the Midwest, according to a May 20 Fox Business report: "Although it may be best known for its university and Cornhuskers football team, the city of Lincoln, Nebraska has the most fiscally fit residents of any large urban area in the U.S., new research showed.

"It scored high grades and clinched the top spot in the ranking that examined the financial stability of people in 100 American cities."

Editor posits a 'Midwestern mindset'

The rankings were published in Men's Health magazine, whose deputy editor, Matt Marion, said "You could interpret, perhaps, that there is a Midwestern mindset to just stay the course when it comes to these times, and people are a bit better able to weather some of these ups and downs because they don't get in over their heads with spending and debt, for example."

The magazine analyzed eight criteria:

  • personal bankruptcy rates of residents

  • credit scores

  • foreclosure rates

  • personal debt

  • the percentage of homeowners and renters who spend more than 30% of their income on housing, and

  • how much residents contribute to personal pension funds.

Consumer bankruptcies rose every month from 2007 through 2010

A press release from the National Bankruptcy Research Center (NBKRC) says that from 2007 through 2010 "every month’s filings were higher than the filings for the same month in the previous year, but we have now had four consecutive months in which filings were down from the previous year. The worst is behind us."

However, certain pockets remain sparse:
Nevada and Georgia Still Have Highest Filings in the Country: Nationwide, 2011 filings amount to about 2063 filings per million adults, about one in every 480 adults. But that figure is quite misleading, because through the course of the last two years the filing rates have become increasingly disparate throughout the country. Generally, the highest filing rates are concentrated in the Southwest and a swathe cutting up from the Southeast. Thus, on a population-adjusted basis, Nevada has almost exactly twice the national filing rate (4123); Georgia, Utah, Tennessee, and California follow (in that order), all with more than 3000 filings per million adults already this year. At the other end of the spectrum, seven jurisdictions this year have filings less than half the national average. In ascending order, they are Washington, D.C., Alaska, Vermont, South Carolina, North Dakota, Texas, and South Dakota.

Trending Worse in Delaware, Utah, and California, but Finally Better in Nevada: Perhaps the most interesting way to think about the data is to focus on the trends – changes in filings since 2010. As mentioned above, at the national level filings for 2011 have fallen steadily, about 6% below filings for 2010. But that conceals a bipolar pattern among the separate states. In five states, filings are still rising – by more than 10% in Delaware and Utah, and by smaller amounts in New Jersey, California, and Alaska.

Business rates improve significantly

The ABI says business bankruptcy rates are showing quite an improvement: "Business filings for the three-month period ending March 31, 2011 totaled 12,376, representing a 15 percent decrease over the first quarter 2010 total of 14,607. The first quarter 2011 business filing total also represented a 5 percent decrease from the fourth quarter 2010 total of 13,030."

ABI rankings, where rates still high

Here's the ABI rankings for "states with the HIGHEST PER CAPITA FILING RATE (Total Filings) for the 12-month period ending March 31, 2011:"

1.     Nevada
2.     Georgia
3.     Tennessee
4.     California
5.     Indiana
6.     Alabama
7.     Utah
8.     Michigan
9.     Arizona
10.  Colorado

Districts with the HIGHEST PERCENTAGE INCREASE in total filings for the 12-month period ending March 31, 2011 (compared to the identical period in 2010):

1.     Southern District of Florida: 26.5%
2.     Central District of California: 22.8%
3.     District of Utah: 19.7%
4.     District of Hawaii: 18.1%
5.     District of Arizona: 11.9%

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