December 18, 2014

According to the American Bankruptcy Institute and data supplied by Epiq Systems Inc. a total of 678,685 consumer bankruptcy petitions were filed during the first 9 months of 2014.

This represents a 12% decline from the 767,510 consumer bankruptcy petitions filed through the first 9 months of 2013.

The American Bankruptcy Institute (ABI) attributes the decline in consumer bankruptcy filings to the changing structure of household debt.    According to Ed Flynn, the editor of the ABI journal:  “Bankruptcy filings have been on the decline for nearly 4 years and the length and severity of the decline is far greater than most other periods of bankruptcy decline.”

This is not surprising based on the state of the economy.

The great recession led to massive job losses, large decreases in home values and major decreases in actual household net worth.    Although the economy is improving and the there is a link to fewer filings, most significant is the change in the debt structure.    There is more debt in student loan debts (generally not dischargeable).

There appears to be less credit card debt too, but let’s wait and see until after the holidays.