The Second Derivative on the Bankruptcy Filings Rate
The bankruptcy filing rate continues to decline. That is bad news for bankruptcy lawyers but good news for, well, people. The second derivative, however, seems to be declining -- that is the rate of change in the rate of change is slowing, albeit barely. Instead of year-over-year declines each month of 14-15% as was happening last year, declines are now around 11-12%. Year-over-year declines the past three months have been -11.0%, -12.5%, and 11.4%.
But, declines are still declines. Overall, total U.S. bankruptcy filings look like they will be about 1,030,000 (give or take) for the 2013 calendar year, which is about what I predicted in May. That will be a 13.2% decline as compared to 2012. Although I have not done a formal analysis, the trend line suggests and short-term rises in consumer credit suggest bankruptcy filings will continue to decline well into 2014.
Bankruptcy filing rates remain historically low as well. As the chart shows, the 12-month moving average on bankruptcy filings now stand at 3.34 per 1,000 persons. Ignoring the statistical anomalous gyrations around th2 2005 bankruptcy, the last time the filing rate was that low was 1995. The filing rate has been as high as 5.67 per 1,000 persons in 2002 and peaked at 5.07 per 1,000 persons in 2010 before the present decline began.