Bankruptcy Filings in Phoenix Area Drop by More than 25 Percent

July 13, 2012

By: John Clark

The total number of bankruptcy filings in the Phoenix metropolitan area fell by 27 percent last month, compared to the same time last year, according to a recent report from Arizona Central News.

This June, 1,770 people sought the protection of bankruptcy in the Phoenix area, bringing the region’s total filings this year to 10,867, which is down nearly 25 percent from the 14,271 petitions that had been filed by this time last year.

The Phoenix bankruptcy figures matched those seen across the state of Arizona, which saw a monthly drop of 25 percent and an overall dip in bankruptcy filings of 23 percent over the first six months of 2012.

These numbers, which were compiled by the U.S. Bankruptcy Court in Arizona, closely matched the national trend, as many consumers seem to have put their finances in a stable condition following a surge in bankruptcy filings during the height of the recession.

Nationwide, last month, 18 percent fewer people filed for bankruptcy than they did in June 2011, and the total number of filings through the first six months of 2012 is 14 percent lower than the same period last year, according to statistics released the American Bankruptcy Institute.

In the opinion of Samuel Gerdano, the executive director of the American Bankruptcy Institute, United States consumers are on pace to file the lowest number of new bankruptcies since "before the financial crisis in 2008."

This view is supported by James Chessen, the head economist for the American Bankers Association, who told sources that consumers "have done a remarkable job getting their finances under control."

And it’s not just bankruptcy statistics that show American consumers may be digging themselves out of the financial holes they found themselves in during the recession. Sources indicate that the loan delinquency rate fell for 10 out of 11 key loan categories that are tracked by the American Bankers Association.

And the overall rate of avoiding late payments on loans was at its highest point since 2007. The default rate for three major loan categories, cars, mobile homes, and home equity, all fell by a fairly substantial margin, according to sources.

Some skeptics, though, are quick to warn that the low levels of consumer debt could simply be a result of consumers’ lack of spending over the past three years.

As the economy improves, the theory goes, consumers will begin making more purchases with credit, and if more financial instability is down the road, the bankruptcy rate could start rising again.