In the years immediately following the 2008 recession, bankruptcies in this country increased by about a million annually. The good news is that those numbers have started trending back down. In 2015, we had the lowest number of filings for personal bankruptcy since before the recession -- under 820,000. That's lower than in 2007.
Of course, numerous factors can contribute to an individual's financial downturn, including medical bills, job loss, mounting credit card debt and legal judgments.
The website NerdWallet recently did a study of bankruptcies throughout the country to determine whether there were geographical patterns. They looked at filings between April of last year and March of this year. The median rate was 224 bankruptcy filings per 100,000 people. However, the numbers varied significantly by state and even county. Most people who file for personal bankruptcy choose the Chapter 7 option.
New York came in at 145 filings per 100,000 people. That's significantly lower than our neighbors in New Jersey, which had nearly double that, at 279. Connecticut and Pennsylvania were both slightly higher than us, at 167 and 169, respectively.
Generally, states with the lowest median incomes had the highest bankruptcy rates. Six of the 10 states with the highest bankruptcy rates and eight of the 10 counties with the highest rates are in the south.
Ironically, often the states that have the highest rates of bankruptcy also offer the fewest legal protections for those filing for bankruptcy when it comes to what creditors can take. In Kentucky and Alabama, for example, creditors can seize just about all of a person's assets.
If you are considering bankruptcy, it's essential to know what your options are and what protections the law offers you. An experienced New York bankruptcy attorney can provide advice and guide you through the process if bankruptcy is the solution you choose.
Source: NerdWallet, "States and Counties With the Highest Bankruptcy Rates," Courtney Miller and Laura McMullen, Aug. 08, 2016