Summary Of 2016 Bankruptcy Filings—Cases Down Nearly 50,000. But Are Debt Levels Rising?

U.S. bankruptcies ended 2016 on a very positive note…or what passes for positive. 
The year saw nearly 772,000 filings, which may sound like a big number–until we look back 2010 when personal bankruptcies reached a record high of 1.5Million. Since then, the number of individual bankruptcy cases has steadily declined, reaching nearly 772,000 in 2016, down about 48,000 from 2015.
Personal bankruptcies accounted for 95% of all 2016 cases, business bankruptcies were 5% of the yearly total. Of the individuals who filed in 2016, about 61% were Chapter 7 cases. These cases completely wipe out credit card, medical and other personal debts except for specifically exempted sums such as child support, alimony, student loans, taxes and court fees.
Another 290,000 filings were Chapter 13 cases, which are called ‘wage earner’ plans. These filings allow the debtor, who is employed, to repay their debts over 3- 5 years.
Business bankruptcies accounted for 38,000 cases in 2016.
The fact that bankruptcy cases continue to trend downwards is good news. But will the downward trend continue? Americans have been adding to their debt levels lately. 3 out of 4 people say they live paycheck-to-paycheck. Auto debt is increasing, as the average car loan is now $29,880 and average monthly payment is $499. Positively, however, delinquencies on home equity loans and and home equity lines of credit improved.
Consumer sentiment has recently surged, so we shall see how the economy does in the coming year.

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