Often when the economy is doing well, it means individual consumers are also doing well. This can mean a decline in bankruptcy rates. For many years the economy has been strong, and Florida’s middle district has seen falling filing rates, but in 2018, there was a change in filings despite no major changes in the economy. According to the Tampa Bay Times, bankruptcy filings were up in this district for the first time in almost a decade.
The increase in filings within this district continued to climb during the beginning of 2019. This is a troubling statistic. Those who study these rates are unsure of why this is happening within this district.
Possible causes
Despite a strong economy, there are indications that consumers are more in debt than ever before. Information from federal sources indicates that consumer credit card debt is at an all-time high. Getting behind on credit cards makes it easy for people to have to file bankruptcy to save themselves from financial trouble. This could be one reason behind the increase in filings.
Another issue is that many consumers also are upside down in their auto loans, meaning they owe more than the vehicle is worth. This may be due to higher rates of refinancing loans. People may be adding years to their repayment while their vehicle continues to decline in value.
Something else to consider is the national rate of bankruptcy filings has also gone up. It may not be a Florida issue at all. However, there is still no answer as to why this is happening in a strong economy with low unemployment rates. It just may be that it is a result of consumer spending.
Whatever the reason, the hope for 2020 is to start to see rates go back down again. If bankruptcies continue to rise it could foreshadow a major change in the economy or within other areas seeing success currently.