Bankruptcy filings fell 1.8 percent for the latest 12-month period ending on Sept. 30. This marks a 10-year low in filings. Overall, Texas residents and others across the U.S. filed for bankruptcy 790,830 times in September 2017 compared to 805,580 in September 2016. While the number of bankruptcy filings has dropped, those who study the issue say that many people are still in a precarious financial situation.
One variable that could reverse the trend of declining bankruptcy rates is a rise in interest rates. If rates rise, both consumers and businesses may start to turn to bankruptcy in higher numbers. The fact that the economy has been expanding for an extended period of time may leave it vulnerable to a sudden downturn. That may result in more people filing for protection from creditors.
However, it is also noted that the economy as a whole is relatively stable. Household debt levels are also remaining stable, and changes in household debt would be a stronger sign of changes to the economy as a whole. It may also be important to keep an eye on the number of family farmers who are filing for Chapter 12 bankruptcy. In 2017, there were 508 filings compared to 458 in 2016, and Chapter 12 is seen as easier to complete compared to Chapters 7, 11 or 13.
Filing for Chapter 13 bankruptcy may make it easier to reorganize some or all secured or unsecured debts while retaining property. Creditors generally cannot repossess a car or foreclose on a home during the repayment period that lasts three or five years. Creditors may also not be able to file lawsuits or take any other action to collect a debt while a case is still ongoing.