Economists have different ways of looking at rates of personal bankruptcy. Obviously, people are more likely to have financial problems when the job market is bad and when they cannot afford to pay toward their home loans or credit card debt. All this means that bankruptcy rates may rise when the overall economy is weak. At the same time, a rise in bankruptcy rates can also be a sign of the health of the overall economy. When the economy is in better shape, people are willing to take on more financial risks for their families and their businesses. Many of these risks are good for the overall economy, as they mean more sales and more investment. Still, not all of these risks will reap rewards for the individuals involved. When these risks don't pan out, the individuals may file for bankruptcy.
With all this in mind, there may be a mixed reaction to the latest figures from the U.S. Bankruptcy Court. There were 1,560 filings for bankruptcy in Arizona in November, a decline of 15 percent from the same period a year earlier. It was the 34th month in a row that the monthly number has declined from its levels of the previous year.
Economists said the lower bankruptcy rates reflect the fact that consumers are taking on less personal debt. Other statistics show that the number of delinquent credit card and mortgage payments has been falling. Some figures show house prices are rising and that the job market is slowly getting better. However, the lack of debt also suggests that consumers and businesses are still worried about the economy and are not eager to take risks and make investments.
Whatever the bankruptcy rate means, each filing for personal bankruptcy represents a very important step for the individuals involved. For many people, filing for bankruptcy is a powerful tool toward getting debt under control and returning to financial health.
Source: Arizona Daily Star, "Bankruptcy filings in Arizona lowest in 9 months," Russ Wiles, Dec. 8, 2013
