Bankruptcy filings declining? According to an article at Credit Slips by Bob Lawless, bankruptcy filings declined in December and January. I thought we were in the middle of the worst economic crisis since…well, since forever. If bankruptcy lawyers are filing fewer bankruptcy cases, doesn’t this mean an end to the economic crisis? No.
As Bob Lawless explain, historically, bankruptcy filings in December and January decline. Although no one knows exactly why, most people think it is due to the holiday season. My personal experience as a bankruptcy lawyer shows the same cycle. Typically, I see a drop off in late November through the end of January. By February, bankruptcy filings begin to pick up. In this economy, with business bankruptcies rising and unemployment rising, bankruptcy filings will increase dramatically, so “batten down the hatches” and get ready for a rough 2009.
What’s the moral? Keep your statistics in context. This big picture is this: America, corporations and individuals, are in for a long, hard “detox”. Decades of rampant borrowing, irrational exuberance, and consumerism are finally catching up. I know it sounds “old-fashioned”, and many smart economists disagree, but it’s time to get back to common sense money management; less debt, more savings, and sound investing.