I came across some interesting data on bankruptcies, particularly in the Sunny State of California. With 30+ million in population, and perhaps one of the few net contributors to the Treasury, tracking the health of the Californian economy is a good indicator of the rest of the country. Or in the least the direction the remaining states are going.
Turns out, since the mid 90's the late 2010's and 2011 coming up are perhaps the best times to be a bankruptcy lawyer.
2010 saw record highs for Chapter 7 filings (for those of you who don't know Chapter 7 filings includes the sale of a debtor's nonexempt property for distribution to creditors).
2005 saw new legislation emerge which is why we see the delince in 2006, however, the housing crisis started to emerge in 2006 as well. (Some would argue the toxic mortgage problem started long before).
Since 2007 onward the quarterly increase of filings was about 10% What does that work to?
Well at that rate mid-way through 2010 there were new record highs for filings.
So all is lost? Is the economy in shambles with no hope for recovery?
Not quite. Yes, it's true, each quarter we're hitting new highs, and lately it seems the pace won't slow, but it turns it out it is.
The rate at which the increase of filings occurs is slowing. That means by mid-way 2011 we could potentially see a decline in bankruptcies for the first time since Bush enacted legislation on bankruptcy rules.
Since bankruptcy data comes out 2-3 quarters after, and since bankruptcies are a reflection of the last straw for consumers (generally the last option people take), we could conclude that the economy is in recovery mode, and we're winning.
It's easy to point out that California is on the brink of bankruptcy, maybe not the state itself, but mamy of the cities. But there does appear to be a silver lining.
Things are improving, but I think the better question to ask is HOW MUCH will they improve? I don't see the rate of Chapter 7 filings decreasing to zero, obviously, but the million dollar question is at what point will we see the 'decline' in filings taper off?
So all is not lost, the data suggests, a mild turn around, but how strong this turn around will be (is) is still unknown.....
Still, probably a good thing to be a bankruptcy lawyer during these economics times.....lots of work to be had.....
Data from Rand California, compiled by San Diego Bankruptcy Attorney and used with permission.