Personal bankruptcies:

Total: +12% Chapter 13 (repayment plans): +6% Chapter 7 (liquidation): +15%

You might not know this, but there are two kinds of personal bankruptcy. You can’t call them “good and bad,” not really – so let’s call them “bad and really bad.”

Chapter 13 bankruptcies are bad. Technically, bankruptcy is filed by individuals or married couples, but the consequences are borne by the entire households – spouses, children and other dependents. This process involves negotiating a payoff plan (usually over 3-5 years) with creditors. Essentially, this indicates people who are still trying to pay their debts, but can’t make monthly payment minimums without some kind of negotiation.

Chapter 7 bankruptcies are really bad. This is usually what people picture when they hear the word: Debts so overwhelming that repayment isn’t possible, assets sold off under court supervision and families forced into this last resort after exhausting every other option. Financial distress at the breaking point.

That’s why it’s concerning that Chapter 7 filings grew 2.5x faster than Chapter 13. It’s a sign of the worst kind of financial strain. The last economic resort.

If that wasn’t bad enough, bankruptcy filings have accelerated toward the end of the year — December filings rose 21% on an annual basis.

There are really only two ways I can interpret this…

Families are in severe financial distress and it’s getting worse
People are gaming bankruptcy laws in order to “get a fresh start”

Either way, how can GDP and bankruptcies be rising at the same time?

https://citizenwatchreport.com/gdp-says-the-economy-is-booming-but-bankruptcies-tell-a-different-story/