Over the past few years, bankruptcy filings in both Utah and the United States have risen due to the recent economic downturn. As consumers have lost their jobs or received cuts in salary, many of them have found themselves with more debt than they can pay off. As a result, they have filed bankruptcy to find relief from these debts.
While the number of bankruptcies has leveled off and is beginning to decrease, this does not necessarily indicate the economy is improving. Recent statistics are affected by the fact that bankruptcy law was drastically changed in 2005, resulting in a 73% reduction in bankruptcies filed in Utah in 2006.
The media has written many stories about the increases in bankruptcies from 2007 to 2011 but have rarely told the whole story. Even with as bad as our economy has been the last few years, bankruptcies in Utah are still being filed at a rate almost 25% lower than the historic highs of the early 2000s. This is very important to understand because there are still many people who have not recovered from the recession. Typically we see those people file for bankruptcy when the economy stages a strong recovery, when there is hope and reason for these people to resolve their debt problems. Therefore we can expect another surge in bankruptcy filings when the economy truly starts to recover.
The graphs below show the total numbers of consumer bankruptcy filings in Utah (left) and the U.S. (right). Total bankruptcy filings in the United States peaked in 2010, with an 11% decrease between 2010 and 2011. In Utah, annual bankruptcy filings continued to grow, with 2011 seeing the highest number of filings to date. However, the curve is leveling off, with only a 2% increase in 2011, compared to a 56% increase in 2009, the year with the highest increase in bankruptcy filings in Utah.
Looking at the information for the first half of 2012, it seems that bankruptcy numbers in Utah have also begun to decline. In the first 7 months of 2011, there were 11,366 bankruptcy cases filed in Utah. In 2012, there were only 9,984, a 12% decrease.
For more information on historical bankruptcy statistics, view our bankruptcy history and statistics page.
(Statistics in this article were derived from numbers provided by the American Bankruptcy Institute and the United States Bankruptcy Court District of Utah)