The Office of the Superintendent of Bankruptcy has just released statistics indicating that the number of personal bankruptcy filings in Cambridge have dropped since last year. Here are the numbers:
In the first six months of 2010, 208 residents of Cambridge filed personal bankruptcy. An additional 144 Cambridge residents filed a consumer proposal, for total filings of 352 people between January and June of this year. If these rates remain consistent for the rest of the year, that projects to 704 Cambridge residents filing a bankruptcy or proposal this year. How does that compare to previous years?
In 2009, 634 people went bankrupt in Cambridge, and 283 proposals were filed, for a total of 917. (You can see more statistics for other years on our Cambridge bankruptcy statistics page). That would indicate that we may see a drop of 23% in the number of insolvencies filed this year in Cambridge. Why the drop in filings? The Cambridge economy was slightly better in early 2010 than it was in early 2009. The stock market crashed in late 2008, and that eroded business confidence, leading to the decline in 2009. Today the economy is somewhat improved (as compared to 2009), with unemployment somewhat lower, and interest rates remaining stable.
Attached is a postal code map of Cambridge showing where bankruptcies occur. Not surprisingly, the largest number of personal bankruptcies are in the areas where most people live; the more industrial areas have fewer bankruptcies.
For the economy in general, a declining personal bankruptcy rate is good news. It generally means that more people are working, and therefore they are able to service their debts.
What’s ahead for the balance of 2010?
I believe we will continue to see a decline in the bankruptcy rate in Cambridge for at least the next few months. Interest rates and unemployment remain stable, so no big changes are expected. However, as we all know, that can change quickly. If interest rates begin to rise, or if the impact of the new HST begins to reduce consumer spending in Cambridge, the bankruptcy rate could edge higher towards the end of 2010.
One final comment: the good news is that a greater number of Cambridge residents are choosing to file a consumer proposal as an alternative to bankruptcy. In 2009 just under 31% of Cambridge residents filed a consumer proposal (the rest filed bankruptcy). This year that percentage has increased to 41%. That’s a big increase, and it’s good news because it means more people are choosing to negotiate a settlement with their creditors to avoid bankruptcy.
More than a third of all consumer proposals filed in Cambridge are filed by my firm, Hoyes, Michalos & Associates, so if you are interested in learning more about this increasingly popular alternative to bankruptcy, please call my Cambridge office at (519) 622-3773, or e-mail me today to arrange a no charge initial consultation.
