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While total bankruptcy petitions nationwide by consumers and businesses are still well below Great Recession levels, analysts say there is an unmistakable trend upward, the New York Post reported. New York state’s bankruptcy filings, for instance, have risen steadily the past three years, hitting 34,711 in 2018, up from 30,112 in 2016, according to the American Bankruptcy Institute (ABI), based on data from Epiq Systems. More consumers nationwide are falling behind on their payments and filing for bankruptcy to resolve overwhelming debt loads. And low unemployment, an uptick in average wages and the latest Fed interest rate cut have not restrained the debt monster. Some cash-strapped consumers are even finding relief at food pantries. “In high-cost cities like New York, personal incomes are not often enough to pay the household bills,” Zac Hall, vice president of anti-poverty programs at the Food Bank of New York, told The Post. “We are seeing people using consumer debt as a way to make ends meet when they come here,” he added, citing the pressures his nonprofit faces to keep up the distribution of food and meals at no cost to some 1.5 million New Yorkers. And unmanageable debt is also forcing more companies to file for bankruptcy, triggering a wave of job cuts — with nearly 43,000 job losses announced in the first seven months of this year, according to a new report by Challenger, Gray & Christmas. It’s almost 20 percent more than all bankruptcy-linked job cuts in 2018. In the latest example, last week Barneys New York said it had filed for chapter 11 protection. Read more. 

Click here to read ABI’s statistical release and click here to access the monthly statistical charts. 

In the first seven months of the year, U.S.-based companies announced 42,937 job cuts due to bankruptcy, up 40 percent on the same period last year and nearly 20 percent higher than all bankruptcy-related job losses last year, a report released Tuesday concluded, MarketWatch.com reported. Despite record-low unemployment, bankruptcy filings have not claimed this many jobs since the Great Recession. “It is the highest seven-month total since 2009 when 50,258 cuts due to bankruptcy were announced,” according to the report by outplacement and business coaching firm Challenger, Gray & Christmas. “In fact, it is higher than the annual totals for bankruptcy cuts every year since 2009, when 50,911 were announced for the entire year.” Companies cited bankruptcy as the reason for 11.6 percent of all job cuts announced from January to July. That’s compared to 11.3 percent of all cuts for the same period in 2018. Since 2007, bankruptcy has accounted for approximately 6 percent of all job cuts every year. The Challenger report tracks planned job cuts publicly announced by U.S.-based employers. Read more. 

Click here to read ABI’s press release on July bankruptcy filing statistics. 

People are twice as likely to file for bankruptcy if their health insurance has been interrupted, according to a new study published this week, MarketWatch.com reported. In fact, all it takes is a coverage gap within two years for the chance of bankruptcy to jump twofold, according to the study published by the American Bankruptcy Institute. “Continuing health insurance matters,” said Prof. Michael Sousa, one of the authors and an associate professor at the University of Denver Sturm College of Law. Prof. Brooke Gotberg, the other author on the latest study, and an associate professor at the University of Missouri Law School, said that the study underscored the importance of health insurance. “There’s general consensus if somebody has a horrible, unforeseen unmitigated medical emergency, that’s shouldn’t destroy their lives.” The researchers analyzed Bureau of Labor Statistics data of more than 12,500 people. They found a “strong association” between coverage interruptions and consumer bankruptcies. That link held true even when controlling for variables like earnings and debt-to-income ratio. From 2008 to 2014, 454 people in that sample declared bankruptcy. Divorce, health problems and lower incomes were usually factors at play when someone experienced interrupted health coverage, the study said. Many insurance plans are connected to an individual’s employment or that of his/her spouse. Plus, a health limitation can create employment instability, it added. Read more. 

To read the full study published in the Summer 2019 edition of the ABI Law Review, please click here.