Top States for Bankruptcy Filings

As the economy continues to get hit, bankruptcy filings also keep growing. Over the last 12 months LegalMatch.com has had several thousand customers come to our site seeking consumer bankruptcy attorneys. I was curious to see if our numbers matched up with those from the American Bankruptcy Institute, which tallied official federal records for consumer bankruptcy filings in 2008.  The following are LegalMatch’s top bankruptcy states: 

         State            Percentage of Total Filings

1. CA               14%
2. FL                8%
3. NY              5%
4. IL                 4%
5. TX               4%
6. VA               4%
7. OH              4%
8. MI               3%
9. AZ               3%
10. NJ              3%

Our top ten was very similar to the results from the American Bankruptcy Institute, with California leading the way in filings for 2008.

A few states are over-represented relative to their population on both lists. Florida, for instance, has significantly more consumer bankruptcy customers coming to LegalMatch.com than New York and Texas, who both outnumber Floridians substantially. Arizona and New Jersey also make the top ten despite being 14^th and 11^th in population.

Why is Florida being hit so hard? Florida is always near the top in every other negative economic indicator, such as foreclosures. Some Florida developments are beginning to resemble ghost towns full of brand new empty houses. Markets such as Florida suffer the most from boom and bust periods, which leads to higher bankruptcy rates as more and more residents run into problems from their radically devalued homes.

California may have suffered from a similar malaise; Bloomberg reported that February 2009 house prices in California dropped an average of 41% from February 2008, compared to only a 16% drop nationally over the same period. 58% of home sales during this time were foreclosure sales, surely a significant reason for the dramatic declines in value.

Looking at stats such as foreclosure rates, bankruptcy rates, and other economic statistics indicates that all these things are related. If one state is suffering in one area it is likely also suffering in another. Stay tuned to LegalMatch for more analysis of economic trends and how your state might be faring during this massive economic downturn.