Many people considering filing Chapter 7 or Chapter 13 bankruptcy in the Sacramento metropolitan area are interested to know the statistics associated with filing for protection from their creditors and elimination of their debts. These people are relieved when they find that most individual bankruptcy cases are not caused by reckless spending. The number one reason that causes a person to file bankruptcy is financial hardship.

As we have seen over the last few years, peaks in bankruptcy petitioner typically occur during times of economic downturn. Interestingly, states with the least consumer friendly laws ordinarily receive the most bankruptcy petition filings. This is because those laws make it easier for creditors to collect unpaid debts from the individual. The United States saw the highest number of bankruptcy filings in 2005 (likely due to a change in the law making it more difficult to file bankruptcy). That year the Courts processed over 2 million bankruptcy cases. Since reform of the bankruptcy laws in 2005 the statistics have gone up and down. Over the last 5 years the Courts have seen the highest number of filings in 2010, with over 1.5 million cases filed. Last year, the federal bankruptcy courts saw less than 950,000 cases filed.

California has typically seen the highest number of bankruptcy cases filed throughout the nation. This is in large part due to our high population. Conversely, Alaska typically sees the fewest number of bankruptcy filings. For example, Alaska residents accounted for less than 1,000 bankruptcy filings in 2011 whereas California saw more than 240,000.

The demographics of Bankruptcy filers has changed over the last few years as well. For example, the last two decades have seen a large shift in the age of filings. Since the 1990’s more senior citizens have used bankruptcy as a means to protect their remaining assets. In the early 90’s individuals younger than 25 years old made up approximately 11% of individual debtors. In 2007 those younger than 25 made up less than 2% of bankruptcy filers. Individuals older than 55 years of age now account for approximately 20% of those people electing to pursue Chapter 7 or 13.

Until the economic downturn of the last few years, the number one reason for bankruptcy filing was historically due to extreme medical bills or divorce. Recent years have seen the logistics of bankruptcy filings shift to loss of income or decrease in property values. Whatever the reason necessitating a bankruptcy filing the debtors should rest assured knowing that the relief from debilitating debt is available through use of the bankruptcy code. The Court system has also seen a steady rise in repeat bankruptcy filers over the last few decades. A person is eligible to file bankruptcy once every 8 years.

As a Sacramento bankruptcy attorney, I have handled many types of consumer cases and helped many families and individuals eliminate or restructure their debt. If you or someone close to you has considered filing for bankruptcy, you should explore you options by discussing those concerns with someone qualified to answer those questions for you.

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