Debt Relief Industry Forecasts and Trends

Debt Relief Demand Continues to Drop. Bankruptcy Filings Slow.

The latest bankruptcy filing numbers are out. Unfortunately they do not spell opportunity for current debt relief providers of any tax status.

The decline in demand by consumers for intervention services has dropped across the board. For me it’s just further evidence the pipeline for debt relief help is draining and without a new influx of credit issued to consumers we should continue to expect demand to be soft.

The United States Courts have released the latest figures.

Bankruptcy cases filed in federal courts for fiscal year 2011, the 12-month period ending September 30, 2011, totaled 1,467,221, down 8 percent over the FY 2010 bankruptcy filings of 1,596,355, according to statistics released today by the Administrative Office of the U.S. Courts. Filings dropped during the fourth quarter of the Judiciary’s fiscal year, with 15 percent fewer filings than in the same three-month period in 2010.

Additional statistics released today include business and non-business bankruptcy filings for the 12-month period ending September 30, 2011; a comparison of September 2010 and 2011 filings, 4th quarter filings; and monthly filings for the 12-month period ending September 30, 2011.

Business Bankruptcy Filings Fall

For the 12-month period ending September 30, 2011, business bankruptcy filings—those cases in which the debtor is a corporation or partnership, or the debt is predominantly related to the operation of a business—totaled 49,895, down 14 percent from the 58,322 business filings reported in the 12-month period ending September 30, 2010.

Non-business bankruptcy filings totaled 1,417,326, down 8 percent from the 1,538,033 non-business bankruptcy filings in September 2010.

Filings Under All Chapters

In FY 2011, filings fell for all bankruptcy chapters:

  • Chapter 7 filings in FY 2011 totaled 1,036,950, down 10 percent from the 1,146,511 chapter 7 filings in FY 2010.
  • Chapter 13 filings fell 4 percent, from 434,839 in FY 2010 to 417,503 in FY 2011.
  • Chapter 11 filings fell to 11,979, down 16 percent from the 14,191 Chapter 11 filings reported in FY 2010.
  • Chapter 12 filings fell to 676, down 4 percent from the 707 Chapter 12 filings in FY 2010.

Fourth Quarter Filings

The 3-month period ending September 30, 2011, was the Judiciary’s final quarter of fiscal year 2011. Total bankruptcy filings in the fourth quarter totaled 348,635, down 15 percent from the 412,380 bankruptcy cases filed in the final quarter of FY 2010. For a breakdown of filings by all chapters for the quarter, 3-month period.

As you can see, Chapter 7 bankruptcy cases still account for about 70 percent of all bankruptcy cases filed.

I anticipate the consumer demand for bankruptcy will continue to drop more moving forward. That should not be misread as an avoidance of consumers against bankruptcy but a decreased consumer pool of people that currently need debt relief help.


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About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

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