Concerning bankruptcy filings today, the Albuquerque Journal reported recently that:
“Consumers headed into U.S. Bankruptcy Court last year with substantially fewer assets and less debt than in 2010, a possible sign of the toll that the struggling economy has taken on some families, according to a just-released federal report.”
I think that’s a fair conclusion. Many people I speak to have been paring down, and paring down for some time, struggling to pay debt in order to avoid a bankruptcy, including spending retirement savings that otherwise could be protected in a bankruptcy. Their homes have often also dropped substantially in value. They now have fewer assets, and while the debt is less (because some has been pared down), the gap between income and expenses continues to be too great. Bankruptcy remains a good tool for many of them, and that’s a good thing. If they had considered it sooner, though, they might have saved such valuable assets as retirement savings, and that’s a pity.