There is considerable hope and talk about an improving economy. Certainly, let’s hope it gets better. Unfortunately, the number of bankruptcy filings continues to increase so far in 2011.
Consumer bankruptcy filings jumped another 11 percent in Feb. 2011 over the previous month, according to the expert National Bankruptcy Research Center and the American Bankruptcy Institute.
That’s right; another 102,686 American consumers filed bankruptcy in Feb. of this year.
My sense: A still declining housing market and high unemployment are forcing individuals to seek bankruptcy relief.
In 2010, there were more than 1.6 million American consumer bankruptcy filings – the highest level since 2005. The only good news is that bankruptcy filings are fewer by 8 percent in 2011 than they were in 2010.
“Though consumers are striving to reduce their debt burden, high unemployment and a still-poor housing sector continue to fuel new bankruptcies,” said Samuel J. Gerdano, the American Bankruptcy Institute’s executive director in a Wall Street Journal economics blog by Sara Murray.
Recent headlines indicate the U.S. unemployment rate has dropped to 8.9 percent as 192,000 jobs were added in Feb.
However, other published reports indicate a leading outplacement firm states there were another 50,702 in job cuts in Feb. That’s the worst job-cut number in 12 months.
Challenger, Gray & Christmas said the escalation represented a 32 percent increase in job cuts over Jan. of this year. That’s also an increase of 20 percent from Feb. 2010.
The three reasons cited for all the job cuts: Bankruptcies, business closings and cost-cutting.
Now, we have higher gas prices, which could affect employment rolls and the ever-increasing bankruptcy rate.
The bottom-line: Continued high bankruptcy filings are reflective of the stalled economy.