Despite some economic improvement, bankruptcy is still an option that many in Minnesota are seeking out.
In 2010, bankruptcy had reached an all-time high with 22,000 claims filed. While the last 18 months has seen a slight decrease, the rate is still rather high.
Many individuals are seeking to file Chapter 7 bankruptcy, as it is liquidation bankruptcy. Many individuals filing do not have any disposable income that will allow them to pay their bills. This is something that is evident in the fact that there are more Chapter 7 filings than Chapter 13. Chapter 13 allows individuals with some disposable income to enter into a payment plan that enables them to pay back some of their debt.
Nonetheless, when comparing the filings to previous years, the numbers show that fewer people are filing. However, increased consumer confidence has led to an increase in credit card spending, especially over the holiday season. If another economic collapse would happen, then individuals may be unable to pay this credit card debt.
In 2008 at the beginning of the recession, Minnesota saw 16,473 bankruptcy filings, which was a 38% increase over 2007. However, 2007’s 11,795 filings was a 56% increase over 2006’s 7.729 filings, which was a 72% decrease over 2005’s 25,635 filings.
Amazingly, in the past 9 years it appears that 2005 saw the most number of filings. However, from 2007 on, there was an increase. 2009 saw 21,302; 2010 saw 22,090; and 2011 saw 19,196 and that was a 13% decrease from 2010. As of November, 2012 saw 15,716 filings for the year, which is an almost 12% decrease when compared to 2011. The highest filing month in 2012 was March with 1,748 filings.
In regards to regions throughout the state, Fergus Falls has seen the largest decline in filings. Duluth had the least number of filings in 2011.
The numbers are decreasing, but the need is still there. How many individuals need to file bankruptcy is unknown in that many individuals wait until after they have received a judgment against them and their wages are being garnished. The amount of debt in comparison to the number of people actually filing is still off balance in Minnesota and around the country.