The downward trend in bankruptcy filings is giving market watchers hope that the economy is really mending. In the latest news, bankruptcies in upstate New York continued to fall for the 11th straight month, which is in line with reduced filings in Pennsylvania and Arizona.
First Quarter Nationwide Data
In the first quarter of 2011, consumer bankruptcies decreased by 6% nationwide compared with the year before. In the first three months, 340,012 consumers filed for bankruptcy compared with 363,215 filings in the first quarter of 2010. The number of consumer filings in March actually increased by about 40,000 from February, reaching 144,657. However, this is still a decrease from March 2010, which showed a total of 149,268 filings.
Individual States Improving
The second quarter of 2011 started off strong in upstate New York, as consumer filings in April showed a further decline in bankruptcies. This area of the country is enjoying its 11th consecutive month of improvement. It’s beginning to look like the drop in bankruptcy filings is a continuing trend. Buffalo and Rochester combined saw filings drop 15.8% from the year before.
Business filings in the Western District of Pennsylvania also decreased by 14% from 2009 to 2010. And Arizona reported consumer filings dropped by 6.2% in March compared with the previous year.
So what’s going on here? The data suggests the economy is picking up, and people and businesses alike are taking better control of their finances. Nevertheless, there are still states that have reported an uptick in bankruptcy filings, such as California, Nevada, and Florida.
One factor contributing to the nationwide decline in bankruptcies is the reluctance of banks and credit card issuers to approve new credit applications for high-risk consumers. Another factor is that consumers have less credit to exploit as credit limits have been cut and credit cards have been cancelled for consumers in default. As a result, consumers can not run up more debt and are possibly saving themselves from bankruptcy.
With the credit card application process getting more restrictive, fewer high-risk consumers may be looking to apply for a credit card. Still, there are credit cards to help consumers build credit.