Thursday, May 26, 2011

Bankruptcy filings in Colorado down 6 percent in April

In Colorado during April, total bankruptcy cases filed fell 6.2 percent to 3,103 cases. During April 2010, 3,301 cases were filed. April was the third month in a row in which bankruptcies declined, year-over-year, and it marks only the fourth time in at least four years that a monthly bankruptcy total has been lower than the same month one year earlier.

The first graph shows the year-over-year changes in bankruptcy case filings since January 2007:

The appearance of some small declines in the year-over-year comparisons may signal that consumers are beginning to get a handle on consumer debt more than three years after the beginning of the national 2007-2009 recession. The slow decline in the magnitude of year-over-year changes may also signal some stability in household incomes and budgets following a period of increasing insolvency.

In general, however, bankruptcy filings have grown since 2006 following the implementation of the 2005 Bankruptcy Act (discussed here).

The large spike in 2005 preceded the implementation of the new bankruptcy rules. Filings totals have now returned to the levels experienced just prior to the final run-up in cases in 2005.

Recent monthly bankruptcy totals are now on a level similar to what was experienced during April 2004 and 2005, during a non-recessionary period. April tends to be a peak month for bankruptcy filings as people use their tax refunds to pay for bankruptcy attorneys and filing costs.