You may have seen some of the “Too broke to go bankrupt” stories that ran last week, based on this report by the National Bureau of Economic Research. (The report is available free of charge to journalists, upon request.) The gist is that, according to the report, as many as one million American households may be languishing in economic limbo because they can’t come up with the $1,500 (on average) fees required to go through the bankruptcy process.
I wonder how much that phenomenon — vs. the plodding forward of the economic recovery — explains the drop in first-quarter bankruptcy filings reflected in this new report posted by the American Bankruptcy Institute, a lobbying group for the industry’s lawyers and related firms.
The report lists month-over-month and year-over-year personal bankruptcy filings by state, and even includes handy per-capita ratios and a ranking of states by filing rate and per-capita filings. As I guessed, Nevada is faring the worst per-capita, with Tennesse hot on its heels. North Dakota and Alaska enjoy the fewest filings per capita.
You might want to see where your state stacks up, and review some first-quarter filings for details on what seems to be leading consumers to throw in the fiscal towel. A series of case studies or snapshots would be a neat way to illustrate the ongoing bankruptcy issue and where it seems to be hitting hardest in your area. (Getting the filers on the record would be best, but for a story like this I think little profiles with demographic and financial data but no names is acceptable; readers are mostly interested in the circumstances, not the individuals, that are prompting bankruptcy filings.)
The ABI report also includes filings by jurisdiction; I don’t know the code to decipher those designations but with a littlte digging you might be able to sort your state numbers even more finely. And a separate report on business filings gives national totals but no state-level numbers.
Meanwhile another story idea related to personal bankruptcy filings stems from the new-ish requirement that individuals or couples declaring insolvancy attend mandated credit and debt counseling sessions before and after discharge. (Here’s a primer on bankruptcy from the federal court system, which has jurisdiction over all such cases, if you haven’t looked into it lately.) The fees for these sessions are part of the costs referred to in the too-broke articles mentioned above; one account says they average around $85.
I looked up the justice department’s list of approved credit counseling agencies and approved ebtor education providers and was quite taken aback to see that most of the providers deliver their services online. In a way that maks sense — why burden already-stressed people with getting to a counseling office? On the other hand, though, not requiring brick-and-mortar providers seems to open the door to Internet debt-counseling storefronts run by less qualified or downright fraudulent operations. Maybe it’s me but corporate names like “Debtor.com” and “BK Education Services Inc.” don’t inspire too much confidence. And even though the DOJ lists are sortable by state, the same providers predominate in most — meaning some enterprising people have started a virtual cottage industry collecting fees from debtors nationwide.
One other possible bankruptcy angle: I checked out the website of the National Association of Consumer Bankruptcy Attorneys and judging by the dominant topics on the news feeds and other areas of the group’s home page, they are licking their chops over the notion of making student loan debts dischargeable. That would certainly open up a new market, and is a notion you could check out with your area’s members of Congress.
Others appear to be established counseling agencies or religious-based organizations, but it might be interesting to take a look at who’s behind the services available to bankruptcy filers in your region — even to sit in on a counseling session or three if the filers will allow you too, to see what sort of information they’re getting and what it costs.