Bankruptcy filings continued to drop in New Mexico during the first six months of the year, reflecting a closely watched trend around the country that began in 2010.
Petitions were filed for 2,351 bankruptcies statewide, down 7.4 percent from 2,538 filings during the first half of 2012, according to the U.S. Bankruptcy Court clerk’s office in Albuquerque. Filings have been in a general decline since reaching the most recent mid-year high of 3,399 in 2010.
The 2,351 filings so far this year are actually slightly inflated due to a procedural reason, noted Bankruptcy Court Clerk Norman H. Meyer Jr.
Creditors are not supposed to include critical personal information like full Social Security numbers when they file proofs of claim against debtors. Several large creditors, primarily credit-card companies, filed motions in June to redact or black out critical data in roughly 140 cases, he said.
The upshot is those cases show up again in the new filing numbers, Meyer said. “It’s not just New Mexico, it’s happening around the country,” he said.
Nationwide, bankruptcy filings declined about 15.7 percent year-over-year as of the first quarter, the latest period for which official court data are available.
“The gradual increase in employment, coupled with the government mortgage-modification programs and the shrinking of household debt has contributed to the drop in filings,” Albuquerque bankruptcy lawyer Dave Giddens told the Journal .
“The fact that a lot of the new jobs are part time or temporary has kept people from freely spending, so they are using their resources to pay their bills, rather than incur new ones,” he said.
The ratio of household debt to income shrank nationally from the end of 2010 through the end of 2012, then registered a small increase in the first quarter of this year, according to Fed data. Unmanageable debt is at the heart of bankruptcy filings. Rising household debt is associated with a good or improving economy, Meyer said, adding, “As the economy improves, bankruptcy filings tend to go up. It’s counterintuitive.”