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Bankruptcy filings fall below 1 million, sign of better economy

The number of bankruptcy filings rose with the Great Recession. Many people chose to use the downturn in the economy as an opportunity to take a look into their finances and rework them into something more manageable. As the economy improves, the number of bankruptcy filings in the country is trending downward.

In 2014, fewer than 1 million people filed for bankruptcy. According to Moody's Investor's Service, there were 910,000 bankruptcy filings in 2014. This the first time that bankruptcy filings has fallen to below 1 million since 2007. This is even lower than in the 1990s.

Some of the downward trend is being attributed to the bankruptcy reform that occurred in 2005. Another factor seems to be the increased difficulty for borrowing that came along with the Great Recession. Some people are also attributing the downward trend to an increase in employment and a decrease in the household debt. That increase in employment and decrease in household debt mean that a smaller share of household incomes are going toward repaying debts.

While this seems to be a sign of the improving economy, it doesn't mean that the days of filing for bankruptcy are over. If you are sinking in debt and need a fresh start, exploring bankruptcy might help you decide if bankruptcy is an option that will fit your needs.

You should make sure that you understand the different types of bankruptcies, the requirements for each, and your responsibilities before deciding how to proceed. Additionally, you should work to understand how filing for bankruptcy might affect your assets and your financial future.

Source: Barron's, "An Era of Solvency: Bankruptcy Bust?," March. 20, 2015

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