As 1998 draws to a close, many experts predict another record year for personal bankruptcy filings. The 1.3 million petitions filed in 1997 will be matched or surpassed in 1998. Absent significant reforms to bankruptcy law, however, experts do not necessarily agree on whether 1999 will also be a record year. Several factors promise to influence the number of future filings. On the plus side, interest rates and unemployment rates are still trending downward. This helps thousands of consumers who are refinancing their home mortgages, making smaller payments on existing adjustable rate mortgages, or consolidating their debts. Lower interest payments and full employment take away the incentive to seek bankruptcy protection.
Conversely, consumers still struggle with other factors that make personal bankruptcy a viable means to escape personal debt. For example, rising consumer credit card debt and inadequate health insurance plague millions of consumers. When looking for a quick fix, these consumers can easily find willing bankruptcy counsel to assist them. Moreover, with many single-parent households, a high divorce rate and increased mobility, consumers no longer fear the stigma of personal debtor bankruptcy. Thus, lenders should expect the number of personal filings to remain high well into the new millennium even if new records are not reached.