Government statistics regarding bankruptcy filings demonstrate an interesting trend. The trend shows a four-year downward direction and an overall downward trajectory. This table represents filings between 2014 and 2017:

Note that 2017 is not final because the year has not ended. It is expected that there will be a significant spike in filings by year’s end, and while bankruptcy filings are more rare in late December, they usually spike in January.

The consistent decrease can be attributed to a number of factors. While no single factor or combination of factors are dispositive, the following factors suggest plausible explanations for this trend:

• Stronger economy;
• Savvy consumer spending;
• Explosion of consumer lenders; and
• Remote occupations.

Note that this article only addresses consumer bankruptcy issues. While business bankruptcy issues likely follow the consumer trend, it is not discussed here.

Stronger Economy

The stronger economy, as evidenced by the soaring stock market and expanding real estate market, suggests that finding employment is easier. Similarly, those already employed would find it easier to obtain raises and advance in their careers. Such market conditions create an atmosphere wherein fewer people fall into debt and those in debt have confidence that they can escape debt through securing more gainful employment. Bankruptcy affords consumers a discharge, meaning that a bankrupt debtor obtains a discharge of debt upon emergence from bankruptcy. If things are bleak, consumers will readily file for bankruptcy to just rid themselves of the debt; when things are good in the aggregate, taking control of finances seems like a reachable goal.

The stronger economy, particularly the real estate market, allows consumers to borrow against their home to pay off debt. Lately, with low mortgage rates, consumers have more access to cash by virtue of home ownership. Cash can be used to repay debt for those who would otherwise have opted for a bankruptcy filing.

Savvy Consumer Spending

The saying is that the world is smaller. With smartphones, we have the whole world at our fingertips. This may be most evident in consumer shopping. Consumers tend to compare prices instantly online when shopping at stores. There are also virtual coupons accepted at larger retailers.

The use of online shopping, particularly through Amazon, gives consumers a shopping edge. Saving a few dollars on groceries here and there adds up, often enough to keep a consumer out of bankruptcy. Statistics show that shoppers do not go to Black Friday shopping the way they did four or five years ago because so many people just shop online. Cyber Monday is becoming much bigger than Black Friday. With the advent of Ultrabooks, one can buy a basic laptop for $250 and use it just to shop online. It will pay for itself within a short time.

Furthermore, there are websites that are dedicated to comparing prices for consumer goods. Consumers are armed with so much information about where and how to save money that they are saving all the time.  

Explosion of Consumer Lenders

In recent years, lenders geared to consumer lending by providing consumers with unsecured loans has mushroomed. Consumer lending companies are providing consumers with cash, usually within 48 hours. Like never before, consumers have access to funds that in years past would have taken months to obtain. Today, a call to a lender will approve loans to a consumer who has good credit while setting up an automatic debit from the consumer’s bank account on a monthly basis. Even major financial players like Goldman Sachs and JP Morgan-Chase set up consumer lending operations.

Through consumer lending, consumers can stave off bankruptcy for a time or even use that money to invest in a business.  

Remote Occupations

Consumers have more employment options than ever before because they can utilize the internet as an employment opportunity. Many employment opportunities are entirely internet-based. This allows consumers who have skills in certain areas in a locally saturated market to gain employment in a different market. It also allows consumers to supplement their income by using the internet outside of regular working hours, e.g. selling goods online on nights and weekends.

Are drowning in debt? Bankruptcy can provide you with the relief that you need. To discuss this matter further, contact the law firm of Melanie Tavare, a Bay-area bankruptcy attorney.