Why has there been a decrease in bankruptcy filings in the state?
Bankruptcy filings peaked both nationally and in the State of Wisconsin during and after the recent recession. Now, bankruptcy numbers are coming down and returning to a normal level. But, why are the numbers coming down? Apparently, many of the factors that drove them up are no longer present.
During and after the recession, most bankruptcy filings were for Chapter 7, which allows the debtor, in most situations, to take advantage of a fresh start. The major causes of bankruptcy were, and still are, job loss, divorce and medical costs. During the recession, an exponentially increasing number of job losses drove the number of bankruptcies through the roof. Now that many people are working again, the number of bankruptcies filed because of unemployment is coming down. Although many people are not making as much money as they used to, they are seemingly making enough to keep them afloat and up to date with their bills.
Rock bottom real estate values are also less of a problem these days. While the numbers are still not where they were, the market is slowly rebounding, allowing owners to see an increase in their assets. This increase in wealth is allowing more and more people to steer clear of bankruptcy.
Another major cause of the recession, easily accessible credit, is less of an issue at this time. Before the recession, too many unqualified individuals were able to obtain credit in various forms. Now, tougher restrictions have made it much more difficult than it once was to obtain credit cards and mortgages. This has made it harder for people to get into financial trouble.
While it seems that the recent recession taught the country a lesson in several areas, we shouldn’t get ahead of ourselves. There is still plenty of work to be done. Some experts believe that even though we are at a more normal level of bankruptcy filings, that the numbers should go even lower. Things could also go the other way. Experts are keeping their eye on the student loan crisis. Many individuals are unable to pay back their student loans and are turning to bankruptcy for relief. This might cause an uptick in the number of filings in the near future.
If you are considering bankruptcy, you should speak to a qualified Wisconsin bankruptcy attorney today.