Bankruptcy filings rising across the country and it could get worse
Bankruptcies are back ā flashing warnings that more Americans are knee-deep in debt inš big citišes like New York.
While total bankruptcy petitions šnationwide by consumers and businesses are still well below Great Recession levels, analysts say there is an unmistakable trend upward.
New York stateāsā± bankruptcy filings, for instance, have risen steadily the past thršee years, hitting 34,711 in 2018, up from 30,112 in 2016, according to the American Bankruptcy Institute (ABI), based on data from Epiq Systems.
and filing for bankruptcy to resolve overwhelming debt loads. And low unemployment, an uptick in average wages and the latest Fed interest rate cut have not restrainešd the debt monster. Some cash-strapped consumers are even findš·ing relief at food pantries.
āIn high-cost cities like New York, personal incomes are not often enough to pay the household biź¦lls,ā Zac Hall, vice president of anti-poverty programs at the Food Bank For New York City, told The Post. āWe are seeing people using consumer debt as a way to make ends meet when they come here,ā he added, citing the pressures his nonprofit faces to keep up the distribution of food and meals at no cost to some ā¤1.5 million New Yorkers.
And unmanageable debt is also forcing more companies to file for bankruptcy, triggering a wave of job cuts āš ŗ with nearly 43,000 job losses announced in the first seven months of this year, according to a new report by Challenger, Gray & Christmas. Itās almost 20 percent more than all bankruptcy-linked job cuts in 2018. Inš · the latest example, last week Barneys New York said it had filed for Chapter 11 bankruptcy protection.
According to data released last week by the ABI, US bankruptcy filings surged by 3 percent in July 2019 from July 2018. A total of 64,283 filings were reported for July, up from 62,241 for July 2018. And if the trend continues, this yearās overall total of bankruptcies is on pace to hit 796,000, far exceeding the 777,000 for last year.
Meanwhile, record American household debt, near $14 trillion including mortgages and student loans, is some $1 triį¦llion higher than during the Great Recession of 2008. Credit card debt of $1 trillion also exceeds the 2008 peak.
Americans are spending heavily, again ā ź¦and often recklessly, say analysts.
āNo question about the fact that cršedit quality is declining,āā said Dick Bove, a financial strategist at Odeon Capital Group in New York.
Bove noted how American banks have scaled back on the more stringent lending and underwriting standards that followed the 2008 financial crisis, leading banks to purge their portfolios š§of toxic debt.
āThe world is different now,ā he added, āso I feel very confš§ident ā unfortunately ā that there will be increases in bankruptcies.ā