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N.M. Business Bankruptcies Dip

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Copyright © 2012 Albuquerque Journal

Business-related bankruptcies in New Mexico dropped to the lowest level in six years during the 12 months ending with September, in line with the national trend, according to federal data released this week.

Petitions were filed for 185 bankruptcies in which the majority of the debt was from business activities, a 19 percent drop from 229 petitions with mostly business debt over the same federal fiscal year period in 2010-11, the Administrative Office of U.S. Courts reported.

Nationwide, business-related bankruptcies dropped about 16 percent over the same period.

The drop in business-related bankruptcies could be a sign of a stabilizing economy, although many bankruptcy experts point to tighter credit standards as the reason. In a cause-and-effect way, tight credit means businesses haven’t been able to accumulate big debt loads that can lead to financial insolvency.

The vast majority of business-related bankruptcies, both here and around the country, are consumer filings under any one of four chapters or types of bankruptcy. They are classified as business because the consumer checks a box on his or her petition that says the majority of the debt is related to a business.

The 185 business-related filings comprised just less than 4 percent of the total of 4,937 petitions for bankruptcy court protection filed in the state during the 2011-12 fiscal year. Nationwide, business-related bankruptcies made up roughly the same percent.

The 185 filings statewide was the lowest number of business-related bankruptcies since 127 were filed in the 2006-07 fiscal year. Business filings hit a recent high of 284 in the 2009-10 fiscal year.

The 4,937 petitions of all types is a 16 percent drop from the 5,897 filed statewide in the preceding 2010-11 fiscal year. Nationwide, filings of all types dropped 14 percent over the same period.
— This article appeared on page B1 of the Albuquerque Journal

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