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The state of bankruptcy filings

For many, Chapter 7 or Chapter 13 bankruptcy is a last resort after all other options are exhausted. Years of stress over continuing harassment by creditors, threats of lawsuits, and attempt to make ends meet made it the best chance to get out from under.

However, recent statistics reveal that the number of those dealing with severe debt problems diminished to a point where bankruptcy was the only option. However, the early days of a worldwide pandemic that kept people home started a steady decline in filings.

A downward trend

In 2019, which many consider the last year of “normalcy,” a total of 776,674 filings occurred, with business bankruptcies at 22,910 and non-business filings at 753,764. It represented an increase from the previous year’s 22,103 (business) and 751,272 (non-business).

The year the coronavirus breached the shores of the United States, bankruptcy filings went into a steady decline in 2020, with business filings at 22,391 and non-business at 590,170. The trend has continued to the present day.

During the 12-month period that ended on the last day of September 2022, personal and business filings fell 11.7 percent. Overall, September filings for 2022 were at 383,810, a decline from the previous year’s 434,540.

Personal bankruptcies decreased to 11.4 percent (418, 4000 to 370,685), while business bankruptcies were down 18.7 percent (16,140 to 13,125). Chapter 13 debt reorganization filings represented an outlier, increasing by 26.6 percent (117,784 149.077).

When looking at the specific “chapters,” Chapters 7, 11, and 12 were all down by the end of September. Chapter 13 was the sole outlier, with a fairly significant increase from 117,784 in 2021 to the current year’s 149,077.

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