Bankruptcies in Alabama and across the nation have gone up since 2018 with about 800,000 petitions expected throughout 2019. USA Today reported that the nation averaged 2.5 petitions per each 10,000 residents. Experts also anticipate a vast number of baby boomers over the age of 65 to file a petition seeking relief from their debts.
During July of 2019, four states in the nation’s southern region had the highest average rate of bankruptcies per capita. At 5.61 bankruptcies per each of the state’s 10,000 residents, Alabama ranked highest. In addition to the increase noted for consumer bankruptcies, the number of petitions filed by businesses in the Yellowhammer State grew by 4%.
An unexpected job loss often contributes to filing a bankruptcy petition
While there are many factors that lead a person to consider filing for relief, the main reasons are a job loss, unexpected events and overwhelming medical expenses. With regard to job losses, some of the largest companies in the U.S. implemented layoffs during 2019. The list includes older and well-known companies such as AT&T, Lowe’s and Sears. In Alabama, Lowe’s closed its Graysville store and Sears shut down its last remaining full-sized retail store in the state.
Recessions are not always the cause
Evidence does not support the belief that recessions always cause the greatest number of bankruptcies. In 2019, more than 40,000 workers became unemployed due to commercial bankruptcies by the end of July. This is the largest number of seven-month job losses since the financial crisis known as the Great Recession ended in December of 2009.
“Gray” bankruptcies increase as baby boomers age
As the nation’s baby boomers age and begin to retire from the workforce, their demographic has shown an increase in the number of bankruptcy filings. An estimated 21% of America’s elderly are faced with poverty, as reported by Forbes magazine. A retirement system that can often be ill-suited to elders’ needs combined with rising medical expenses may be two of the primary reasons why boomers seek financial relief through bankruptcy.