On July 24, 2024, the Administrative Office of the U.S. Courts released statistics for bankruptcy filings for the 12-month period ending on June 30, 2024. Personal and business bankruptcy filings rose 16.2 percent during that period, compared with the previous year. According to the Court’s statistics, annual bankruptcy filings totaled 486,613 in the year ending June 30, 2024, compared with the previous years’ filings totaling 418,724 cases. Business filings increased the most, up 40.3 percent, for the 12-month period ending June 30, 2024. Non-business bankruptcy filings rose 15.3 percent to 464,553, compared with 403,000 in the previous year. For more than a decade, total filings fell steadily, from a high of nearly 1.6 million in September 2010 to a low of 380,634 in June 2022. Total filings have increased each quarter since then, but they remain far lower than historical highs.
In our opinion, what has likely caused the recent increase in bankruptcy filing was an increase in Americans carrying record credit card and personal loan balances post-Covid. According to the Center for Microeconomic Date at the New York Federal Reserve, credit card debt hit a record high in the first quarter of 2024 at 1.14 trillion dollars, and delinquency rates for credit cards are now at 3.2%. Along with these balances, there has been an increase in the interest rates on those balances in conjunction with the increase in the Federal Reserve’s benchmark borrowing interest rate to combat inflation. In addition, inflation itself has led to an increase in filings as Americans must choose between paying for necessities versus paying their debt balances. Specifically, the increase in inflation has resulted in significant increases in rent, food, and other everyday necessities. For homeowners, there have been additional increases in insurance costs, taxes, utilities, and maintenance related expenses. Considering the above, we are surprised the filing rate has not increased further, however, we will see what happens in 2025. With the economy slowing down, there are definitely some red flags about which to be concerned. While inflation is now cooling, so are employment statistics. As the Federal Reserve prepares to cut interest rates, if the economy continues to slow, we expect the bankruptcy rates to continue to rise.
If you are struggling financially, one of your best options is to speak with an experienced bankruptcy attorney. Please feel free to contact the Law Offices of David I Pankin, PC at 888-529-9600 or use our easy online contact form to schedule a free consultation.
More Information:
https://www.uscourts.gov/statistics/table/f-5a/bankruptcy-filings/2024/06/30
https://www.newyorkfed.org/microeconomics/hhdc.html
