Just three years ago, the United States had the leading number of bankruptcies among countries that are part of the Organization for Economic Cooperation and Development (OECD) — and that was many years after the tightening of bankruptcy regulations. According to this bankruptcy report, the states with the most bankruptcy filings were Tennessee, Georgia, Alabama, Illinois, and Utah. Some people speculate that medical costs were a leading contributor to the increase in bankruptcy filings, while others pointed to economic factors like widespread job losses and the rise of high interest rates on easy credit.
The United States isn\’t the only country struggling with bankruptcy. Here\’s a glimpse at some of the high bankruptcy rates in countries around the world:
Canada is behind the United States in the highest number of bankruptcy filings among OECD countries. There were 64,349 filings in the year ending in March. Filings were down 5.7 percent for the year, but they were up 9.6 percent for the month when compared to the same month a year ago.
If current trends continue, 1 in 6 Canadians will eventually declare bankruptcy or become insolvent. High rates of consumer debt are said to be driving the problem, with many Canadians living beyond their means.
Between 1999 and 2007, the number of personal bankruptcy filings in Germany rose from 1,634 to 103,085. The number of bankruptcy filings increased so dramatically because of a change in laws that made bankruptcy easier to file and more attractive. Consumers cited unemployment and divorce as some of the top reasons for their bankruptcy filings.
Ongoing struggles with unemployment may cause the bankruptcy rate to continue to rise in the near future.
A recent drop in interest rates has pushed bankruptcy filings to their lowest level in 15 years in the United Kingdom. Bankruptcy filings had been steadily rising between 2004 and 2010, but the trend reversed with the lower interest rates and the introduction of other forms of financial relief other than bankruptcy.
Experts say that bankruptcy rates could continue to rise again as the economy improves. With more consumer confidence, many will be tempted to take out more credit, which could lead to financial troubles.
In 2013-14, 29,514 Australians filed for bankruptcy. The highest number of filings were in New South Wales, Queensland, and Victoria.
Like in many other places, young Australians are being tempted by the lure of easy credit and finding themselves in over their heads in debt, leading to higher bankruptcy filings. While bankruptcy affects people of all age groups, the young were disproportionately affected in Australia.
Bankruptcy is a serious and life-altering decision that can have long-term consequences. While it can provide financial relief for the right people, it should be considered seriously before making a decision. Personal bankruptcy filings affect more than just the people who initiate them — taken together, they affect the economic health of the whole country. It is important to take steps to manage your finances now.