Wisconsin bankruptcy filings hit their lowest mid-year level in a decade, reflecting an abundance of jobs and a good economy.
U.S. Bankruptcy Court records show 8,772 bankruptcy petitions were filed in the state from January through June, down 1.2 percent from 8,921 in the first six months of 2017.
The number of filings was almost 45 percent lower than the peak following the Great Recession, when 15,869 consumers and businesses declared themselves insolvent during the first six months of 2010. Bankruptcy filings in Wisconsin have decreased each year since then. The 2018 half-year number was the lowest since 7,394 in 2008.
"Right now, people are working and they're able to meet their obligations, and I really think that is a driving force in why the bankruptcy numbers keep dropping," said bankruptcy attorney James Miller of the Milwaukee firm Miller & Miller.
Wisconsin's unemployment rate in June was 2.9 percent, near historic lows.
People in the building trades, who accounted for many of Wisconsin's bankruptcies during the housing and financial crisis, now are in demand as construction booms.
"Builders are building - those guys are making money," said Claire Ann Resop, a Madison-based bankruptcy attorney with the firm Steinhilber Swanson.
Most of the bankruptcy petitions in Wisconsin - about 71% - were Chapter 7 filings, the type intended to give people a fresh start by wiping out debt such as overwhelming medical bills, utility bills and credit card balances.
The Wisconsin statistics have followed the same path as national data. According to the American Bankruptcy Institute, total bankruptcy filings during the first six months of the year decreased 3 percent to 388,199 from the 399,522 during the same period in 2017.
Miller said another factor that might be helping to reduce bankruptcies is that lenders have become better at helping borrowers modify their mortgages if necessary.
"The mortgage companies have really done such a great job - and I commend them - with putting together mortgage modification programs that have really taken the need to file a bankruptcy to save one's home out of the equation," Miller said.
With plentiful jobs, many of those filing for bankruptcy today do so because a single major event tipped them into insolvency, Miller said.
"It can be a divorce, it can be an auto accident," he said. "The people who are filing now have something that has come up that has rocked their financial world and required them to file."
However, attorneys said, people who have been in careers for a long time but whose industry takes a hit - middle-tier retail executives, for instance - may find it difficult to find employment at the same level of pay and end up being stressed financially.
In Wisconsin, the troubled economics of dairy farming also have put more farmers on the brink of bankruptcy, Resop said.
"I'm really surprised at how many farmers we're talking to and dealing with," she said. "The dairy farmers, they just can't make any money with the milk prices and the corn prices."
Source: Journal Sentinel, "Wisconsin bankruptcy filings are lowest in a decade" Paul Gores, July 25, 2018