South Bags Top Spot for Highest Number of Bankruptcies in the Country

by San Antonio Attorney

The number of people filing for bankruptcy in the US has decreased sharply during the past few years, says data from the American Bankruptcy Institute.  However, many states are still grappling with high rates of bankruptcy.

According to a recent research in 587 counties in the US, the average bankruptcy rate was approximately 224 instances of bankruptcy per 100,000 residents, while the average rate for all the 50 states (including Washington DC) was 226 cases per 100,000 residents.

The study also revealed that:

  • The highest number of personal bankruptcies was recorded in the Southern states. Out of the 10 states with the greatest number of bankruptcy in the country, 6 came from the South, while 8 of the top ten counties were also from the South.  One of the main possible reasons for the exceptionally high prevalence of personal bankruptcies in the area lies in the lower-than-average annual incomes earned by residents—in fact, 8 out of 10 counties with high bankruptcy rates recorded yearly household earnings that were significantly smaller than the 2014 national average annual household income of $53, 657
  • Weak consumer protection laws increase personal bankruptcy rates.  States with weak consumer protection laws and regulations often recorded higher numbers of bankruptcy filings compared to those that imposed strict consumer protection laws.  For instance, data from the National Consumer Law Center shows that bankruptcy rates in Kentucky and Alabama, where it is legal for a creditor to confiscate or sequester almost all assets owned by a debtor, are significantly higher.
  • People file bankruptcy for relief. Simply put, a bankruptcy filing allows struggling individuals a measure of relief. A bankruptcy filing equals freedom from pesky debt collectors, potential salary garnishments, or even lawsuits.  Moreover, depending on the type of bankruptcy filed, onerous debts can be erased.  This is also why most personal bankruptcies are of the Chapter 7 type, which effectively wipes out many unsecured debts, including debts to credit card companies or healthcare providers.
  • There are still ways to access credit even after a bankruptcy. Responsible management of a credit card, or sharing the responsibility with a co-signer, can help folks who once filed for bankruptcy rebuild and access credit. There are also secured cards, ones that require steady cash deposits, which can be issued to people who filed for Chapter 7. A bankruptcy filing makes applying for new credit more challenging, but not impossible. Inquire in banks or credit card companies, for options that may be available.

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