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A Million and a Half Bankruptcy Filings in 2011?

chart-from-credit-slips-blog-2011-projections [1]Written by Craig D. Robins, Esq.
 
How many bankruptcy filings will there be this year?  According to Professor Bob Lawless of the University of Illinois College of Law, there will be 1,457,787 cases this year.
 
He made this projection based on a fairly simple model that uses monthly data from the past five years, as well as various other data on consumer credit, the unemployment rate, cyclical monthly effects.
 
In a recent CreditSlips.org blog [2]post, Prof. Lawless provided his findings which he illustrated with the above graph.  The solid black line shows the actual bankruptcy filings from last year.  The dotted red line shows what the model would have predicted for 2010, while the solid red line shows the models projections for 2011.
 
What are the Most Popular Months for Filing Petitions?
 
Bankruptcy filings often spike in February and March and decline in November and December.
 
Bankruptcy Filings May Decrease Slightly in 2011
 
Prof. Lawless also predicts that there will be a downward trend, albeit slight, for several reasons.  The linear trend is indicated on the chart with the dotted black line.
 
1.    Many economists expect unemployment to decline.  Those who are working are in a better position to handle their finances.
 
2.    There are some signs that access to consumer credit is easing up slightly.  This means that some consumers will be able to borrow more easily to avoid bankruptcy.
 
3.    Consumers are not charging as much as they previously did.  This means that some consumers may have less debt and that other options may be more appealing than bankruptcy.
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