While debt and overspending are major American problems that seem to be leading more and more towards bankruptcy, the revolving credit account isn’t the main cause of this particular legal solution. The main reason people turn to bankruptcy in today’s society is not reckless abandon with credit cards, but severe financial hardship. A large number of lower-income individuals and families suddenly find themselves unable to afford dealing with unexpected major expenses, i.e. job loss, medical bills, etc.
When bankruptcy filings see drastic peaks, it is often a result of a major economic downturn. The states that have the least friendly laws towards average consumers will see the most filings when this phenomenon occurs.
Consider some of the patterns made clear through bankruptcy statistics and numerical studies:
The United States has seen a steady increase in the number of bankruptcy filings over the last century.
Bankruptcy courts saw an all time high of petitioners in 2005. There were more than 2 million cases started that year. In 2005, America saw 1 in every 55 households file for bankruptcy.
In the year following this historic peak, America saw an historic dip in filings with only 600,000 bankruptcies, hitting the lowest number of bankruptcy filings in 20 years.
The majority of bankruptcy filings are for consumers rather than businesses. Today, business bankruptcies account for less than 3% of all filings.
Bankruptcy filings occur more often in those states that have more lenient wage-garnishment laws.
California residents in particular should be aware of the statistics. Consider the fact that while the number of annual bankruptcies varies from state to state due to variations in bankruptcy policies, population, etc., California is in the top 5 when it comes to bankruptcy filings.
For example, in 2011, California had the most bankruptcies of any state in the nation with 240,000. That accounted for 17% of all bankruptcies filed in all 50 states. In comparison, Alaska boasts less than 1,000 bankruptcies in the same year.
If you find that you are about to join the ranks of the financially strapped and need to discuss the benefits of bankruptcy with an expert, call Westgate Law. We’ll get you the fresh start that everyone deserves.