Massachusetts bankruptcy filings fell in October 2011, which was the fourth straight month that we saw a decline in bankruptcies throughout the country. It is not clear if this was because folks have better control of their credit or because the next big wave, with respect to foreclosures, has yet to hit. It is also possible that lenders are not lending as much so folks are not credit restricted. The American Bankruptcy Institute reports a 19.6% decrease in personal bankruptcy filings in October 2011, from the October 2010 filings. Further, total consumer debt fell in the past two years. We have reported the decrease in Massachusetts bankruptcies in numerous blog posts. The news continues to be good!
And October had 2% fewer personal bankruptcies than September this year. For the year, the Administrative Office of the U.S. Bankruptcy Courts reports that the number of business and personal bankruptcies are down approximately 8% over the past year. By the end of the third quarter, September 30, 2011, the number of personal bankruptcies was 1,417,326.
Bankruptcy filings for 2011 are as follows: 353,082 total in the first quarter, with 252,338, or 71% as Chapter 7 no asset personal bankruptcies; 367,487 total in the second quarter with 265,759 or 72.32% as Chapter 7 cases. These statistics are from the American Bankrutpcy Institute. It is interesting to note that the percentage of Chapter 7 filings, as compared to all non business filings, has fluctuated from a low of 60.86% in 2007 to what appears to be the new normal, of numbers in the nigh sixties and low seventies since that time.
On the other hand, home foreclosures have slowed to the point where it will take perhaps more than eight years to clear out the 2.1 million homeowners considered delinquent on their mortgages. While this may be slowing the filings now, it could have the effect of increasing bankruptcy filings soon, and in the future.
Personal bankruptcy has even factored into the current presidential race; noted attorney Gloria Allred recently represented Sahron Bilek who accused Republican a presidential candidate of sexual harassment. Ms. Bilek’s personal bankruptcy filing was pointed out by the candidate as having a “long and troubled history, from the courts to personal finances.” Regardless of the politics, and the unfortunate incident, with personal bankruptcies more prevalent they are affecting folks in ways other than credit scores. This is one way we do not normally anticipate that a bankruptcy will affect our clients.
Earlier this year in our blog, http://www.bostonbankruptcylawyerblog.com, we reported that 13% of all Americans have considered filing for personal bankruptcy. Nevertheless, our antidotal evidence is that personal bankruptcies in Massachusetts are down significantly. It seems that the wave hit hardest last year and this year folks are still hanging in there, negotiating their mortgages, perhaps not paying but not being foreclosed on either. We see more and more folks not paying their mortgages, but having some legal hook to keep them in their homes – a foreclosure gone bad by the bank, a lender that is not moving quickly, or the courts stopping a foreclosure for some reason.