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.