Decline in Bankruptcy Filings in 2012

Data on the number of bankruptcy petitions filed in April shows that the number of bankruptcy filings in the U.S. is dropping. The recent economic downturn has put a lot of people in difficult financial positions, and for the last few years, it has caused an increase in bankruptcy filings. For many people, though, bankruptcy remains a viable way to be freed from the constraints imposed by overwhelming debt.

According to data from Epiq Systems, bankruptcy filings have been steadily declining over the past year. For example, the number of residential filings in April 2012 was 16 percent lower than in April 2011. Commercial bankruptcy filings have seen an even larger decline. Commercial filings were down 25 percent when comparing April 2011 and April 2012. Bankruptcy filings also saw a decrease between March and April of this year; there was an 11 percent decrease in total filings and a nine percent decrease in commercial filings.

Searching for Answers

Financial industry leaders and bankruptcy attorneys have offered a variety of different reasons for this decrease. One reason is that many families and businesses are continuing to cut costs in any way they can to remain afloat.

Another reason offered is that banks have become less willing to immediately begin foreclosure proceedings on struggling homeowners. Bankruptcy can be a tool to temporarily stop foreclosure proceedings because, upon filing for bankruptcy, all debt-collection actions, including foreclosure proceedings, must stop. Therefore, the relatively lower numbers of foreclosure actions may result in fewer bankruptcy filings.

In addition to halting foreclosure proceedings, which grants homeowners time to catch up on missed payments or to pursue loan-modification options, bankruptcy can offer several other benefits to people in dire financial straits. If you are struggling to make ends meet, contact an experienced bankruptcy lawyer to learn more about your options and whether bankruptcy may be right for you.