During the first half of 2017, 8,921 bankruptcies were filed in Wisconsin. This sounds like a lot, but it is actually the fewest filings during that period since 2007, when 7,642 cases were filed during that same period. This is a 1.5% drop from 2016, when 9,060 bankruptcies were filed January through June. We have been at recession levels for so long, this drop is a great sign for our state, and for the Milwaukee area, which leads the state in the number of bankruptcies per capita.
Why are we seeing fewer bankruptcies?
The Milwaukee Journal Sentinel speculated that we would be seeing even fewer bankruptcies if credit was harder to get and more people had health insurance because wages are up and the employment rate is down. That’s probably true, but there are other factors at play as well.
From what we are seeing, a lot of people have been holding off on filing for bankruptcy. Some people have simply not been able to afford the process, while others have waited to file because they expected things to get worse and wanted to start over on an upswing. It is encouraging that these sorts of people are filing now because it indicates that people and businesses are doing better, and expect to be doing better in the near future.
Once the pent-up demand for bankruptcy passes, we should be back to normal, pre-recession bankruptcy levels, which are dictated more by things like access to credit and medical debt.
How low can the bankruptcy rate go?
There are always going to be some number of bankruptcies filed, no matter how good the economy gets. In fact, experts worry when there are too few bankruptcies being filed even more than they worry there are too many. Too few bankruptcies indicate that the economy has slowed to a level that makes people afraid to take risks.
Not just a statistic.
Knowing that bankruptcies are a normal, expected part of the economy is obviously not too comforting when you are the one filing for bankruptcy. Our office tries to make the bankruptcy process as pain-free and quick as possible for our clients. To us, a bankruptcy is not just a statistic.