Bankruptcy is often severely misunderstood, leading to it having a negative connotation in almost every instance. In fact, the vast majority of people think bankruptcy means that a person or a business hit financial rock bottom, and stands no chance of recovery.

The truth, however, is quite different. What bankruptcy really is is a completely legal way for a private or corporate entity struggling with debt to get a fresh start, usually through the expert help of a bankruptcy attorney from Poway or their respective region.

In this part of the guide, we’ll take a look at this phenomenon in a generalized way, to show that bankruptcy is nothing uncommon and nothing to be afraid of, while in the second part, we’ll focus more on fluctuating bankruptcy trends, including filer’s demography and common causes of bankruptcy in the US.

Bankruptcy statistics in the US

According to the American Bankruptcy Institute (ABI), bankruptcy filings in February 2023 (across all chapters) saw an increase of 18% since February 2022, totaling roughly 32,000 compared to last year’s 27,000.

Chapter 7 and Chapter 13 were the most commonly filed bankruptcy petitions, making up roughly 70% of all cases. This comes as no surprise since said chapters are widely available to individuals.

Finally, of the remaining 30%, we have Chapter 11 filings making up about a quarter of the remaining petitions (~25%), with all other chapters (Ch 9, 12, & 15) composing the final 5%.

Which states have the highest and lowest bankruptcy rates?

According to last-year research conducted by

  • Alabama is the de facto leader in the number of personal bankruptcy filings in the US, with an average of 296.44 filings per 100,000 population.
  • Alaska is at the very bottom of the list, with only 29.75 cases per 100,000 population.

Where does California stand in the US bankruptcy hierarchy?

As far as personal bankruptcies go, California features an average of 104.42 cases per 100,000 population. Taking into consideration previously mentioned statistics, we can say that The Golden State lies somewhere in the low-mid tier, inclining toward the lower portion of that bracket. However, here’s where we’re getting into a bit of controversy, but only seemingly.

Last year (2022), California saw almost 30,000 non-corporate petitions, making it the state with the highest bankruptcy filing rate in the US. So, how does that make it a low-mid tier state? To answer that, we must take a look at a few more statistics.

Besides California, the top “contributors” to the list were Florida and Georgia with 25,760 and 23,716 filed cases, respectively. Meanwhile, at the opposite side of that spectrum, we have Alaska, Vermont, and North Dakota, which are the states with the fewest bankruptcies, lingering at 176, 178, and 414 filed cases in 2022, respectively.

This makes it easy to spot a pattern, seeing how the former three states boast the highest population numbers in the US, while the latter three are among the least populous. What we can conclude from everything mentioned is that California boasts below-average bankruptcy rates relative to other states, despite the high number of filed petitions.

Where can I find an experienced bankruptcy attorney in Poway & the area?

If you are struggling with overwhelming debt and are considering filing for bankruptcy, know that you can make the entire process as straightforward and stress-free as possible. Seasoned professionals at The Bankruptcy Lawyers are here to offer expert guidance, legal advice, and assistance to clients in Poway, from the Blue Sky Ecological Reserve to Beeler Canyon and everywhere in between.

With our professional help, you can take the necessary steps toward regaining control of your financial situation. Contact us today to schedule a consultation and see how we can help you get a fresh start leading to a brighter, more stable future.