The American Public Is Over Leveraged: Bankruptcies Are Up 5%

by | Aug 6, 2019 | Headline News | 17 comments

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    More and more Americans are getting themselves into so much debt that it becomes impossible to pay back their loans. In the month of July, there was a 5% increase in the number of bankruptcies filed in the United States.

    Bankruptcy petitions for consumers and businesses are on the rise. While the rise seems “slight,” this could be a glaring sign that the “everything bubble” is going to pop. According to Market Watch, there was a 5% monthly increase in total bankruptcy filings in July 2019, the American Bankruptcy Institute said this week. There were 64,283 bankruptcy filings, up from 62,241 for the same period last year.  And the year totals are shaping up to be much worse.

    In a “booming” economy, this is worrisome. Far too many Americans are spending way too much more than they make. There were 452,797 filings in the first seven months of 2019, up from 450,568 during the same period last year. There were roughly 1,000 more consumer bankruptcies at this point this year, compared to the same point last year, the organization added. This rise in bankruptcies is coming off a ten year low.

    Southern states seem to be affected the most as well, according to Market Watch. Alabama had the highest per capita rate, with 5.61 filings per 1,000 people, followed by Tennessee (5.39) and Georgia (4.31), Mississippi (4.25) and Nevada (3.79).

    There were more than 770,000 bankruptcy filings in 2018, down from 1.6 million in 2010 – the aftermath of the Great Recession. “Congress recently passed legislation that will provide better access to the financial fresh start of bankruptcy for struggling small businesses, veterans, and family farmers,” said Samuel Gerdano, ABI’s executive director.

    Not only are 25% of Americans worse off than they were before the Great Recession, but many others are also using credit to buy essentials, such as food. Millions more people are buying essential goods and services on credit. Consumers had $14 trillion in household debt (and rising) in the first quarter of 2019, according to the Federal Reserve Bank of New York data. That is up from approximately $13 trillion in debt consumers held back in 2008.

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    By now, you’ve heard all the nutty get-rich-quick schemes, the fiscal diet fads that leave you with a lot of kooky ideas but not a penny in your pocket. Hey, if you’re tired of the lies and sick of the false promises, take a look at this—it’s the simplest, most straightforward game plan for completely making over your money habits. And it’s based on results, not pie-in-the-sky fantasies. With The Total Money Makeover: Classic Edition, you’ll be able to design a sure-fire plan for paying off all debt—meaning cars, houses, everything!


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      1. So, the system is working as intended and the losers are the banks. Therefore, I couldn’t figure out the point of this article until I got to the bottom of the page. It’s an ad for Dave Ramsey.

        • “Bankruptcy petitions for consumers and businesses are on the rise. While the rise seems “slight,” this could be a glaring sign that the “everything bubble” is going to pop.”

          Someone here pointed out the signs of the end of the Business Cycle a couple of years back. Increasing inventories and bk’s for individuals and businesses were at the top of the list. Who was that Masked Man ???

          Yeah, it’s in the archives. 🙂

        • Stew,
          Good observation.
          Point is and most guys here already do this,
          get out of debt!
          If you have to buy a book to figure out how
          to get out of debt, you have problems that the
          book won’t solve.

        • “a sure-fire plan for paying off all debt”

          Cash-and-carry, pay to principle, or close the outstanding balance as amicably as possible.

          In the future, if it’s just a pure numbers game, and there is no vice or whimsy in your life, (fill-in-the-blank expenditure) should ideally be earning you more than it costs. Some people can be counted as extremely valuable, though live poorly.

        • I am not so sure the banks are the losers. Depositors certainly are, with higher fees, lower interest paid. Stores are with credit card charges for everything sold. Sensible users of credit are with higher interest rates if they do not pay off every month. Consumers are with higher prices. The winner, the government, as written off debt is now income.

          • Jim

            Correct, the banks are “Too big to fail” and get bailed out. They flourished after 2008.

            • No it’s not K2. Lenders don’t get “bailed out” over individual loan defaults. You can’t generalize every micro to macro. Doesn’t work.
              … and yes Jim, banks go tits up regularly over imprudent lending.

              • Stuart

                I was under the impression that the banks were insured by a version of the FDIC. In the end the insurer gets bailed out like AIG.

                • Nope, the FDIC protects depositor’s money not the bank nor it’s stockholders.

      2. I have a solution A gun buy back, 1000 oz of gold for any gun turned in. Or how about, shutting down all the places that want to charge $3.00 or more for a cup of coffee(save idiots billions) Or a 10 Cent tax on all telephone calls over 100 a day made by Helga who needs to talk to me about the credit issues I don’t have. or would you believe a $10,000 per letter tax on junk mail? We can solve this whole problem.

      3. I like 1000 oz per gun!
        I’ll sell off a part of my collection
        and then go buy some really nice guns.
        I’ve always wanted a Mauser pre 1899
        9 MM broom handle, a Browning Citorai
        shotgun, a full auto AK, Russian made,
        or an full auto Uzi.

      4. An amount of interest, that is hopeful enough to keep you working, but hopeless enough that you will never pay it back.

        A fed that raises interest rates on good news and lowers them on bad news.

        Fake makework, in order to relieve a trade deficit. Legal damages for overproduction.

        The profits of war and consequences of peace.

        A mainspring that maintains enough tension on the clockwork and flywheel that relieves excess tension…

      5. Bankruptcy is a tool that the rich use. Bankrupt businesses are a dime a dozen. Personal bankruptcies will continue to climb. People don’t keep their word like they used to. No honor in paying debts you agreed to pay.

        • Do you have new housing developments, in your suburban area, reserved just for (sic) ‘urban’ 😉 people?

          Count the number of days, between foreclosures, on any single house. It happens, on a specific rhythm.

          Not only do poor people leverage bankrupcies and lending, it’s the lowest common denominator of all business in this country.

          • (sp — bankruptcies)

      6. I have a conspiracy theory.

        Imagine that a sheep earns it’s keep in wool — slightly more than he can grow.

        The ideal, financial balance keeps him under continual sheering, without catastrophic blood loss.

        Exactly how much this means, is negotiable, provided that negotiating never ends.

      7. Am within 6 months of being debt free, now having about 8% of the debt I had, just 8 years ago. Feels wonderful!

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