Economic conditions could reverse slowdown in bankruptcy filings
The number of bankruptcy filings fell 1.8 percent in September 2017 compared to September 2016. Overall, there were 790,830 bankruptcies filed by Michigan residents and others through Sept. 30. There were 805,580 bankruptcy cases in the prior year. According to the Administrative Office of the U.S. Courts, this was the lowest total over any 12-month period since June 2007. However, the decline in overall bankruptcies in the period between September 2016 and September 2017 was the lowest in a one-year period since 2011.
While fewer people are filing for bankruptcy than in previous years, there are still signs that filings could increase. Those who study bankruptcy figures say that the number of cases filed overall is still a sign that many people are in precarious financial situations. If interest rates increase, it could force more people to file. It may also result in businesses filing for bankruptcy in larger numbers as well.
Businesses that may be more likely to file for bankruptcy are in the health and retail sector. Oil and gas companies are generally thought to be less likely to file for bankruptcy. The number of Chapter 12 filings by family farmers has gone up even though it is used less often than Chapters 7, 11 and 13. This is partially because it is easier to file for Chapter 12 compared to 7, 11 and 13.
Filing for bankruptcy may help a debtor be able to make manageable payments on credit cards, medical bills or other types of debt. It also may make it possible to get creditors to stop calling or sending letters. In many cases, creditors cannot proceed with lawsuits, repossess property or foreclose on a home while a bankruptcy case is ongoing. An attorney may help a person determine if he or she qualifies for bankruptcy protection.