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What States Have the Highest Rate of Bankruptcy?

Bankruptcy Lawyer Bryan W. Stone answers the question: “Can I keep my house if I file bankruptcy?”


Bankruptcy is a process that would seem to occur with the same frequency no matter your state or region. After all, people can have financial problems anywhere. While it’s true that people do run into financial trouble all across the country, the extent to which people encounter such trouble varies depending on your geography. To learn more about what geography tells us about bankruptcy rates, keep reading.


Map of US Charlotte Bankruptcy LawyerFirst things first, the overall trend regarding bankruptcy filings is a good one.


Though the economy has done well, it isn’t exactly roaring. Despite the somewhat tepid recovery, bankruptcy filings nationwide are at incredibly low levels. In fact, the rates are the lowest since before the recession began in 2007. While the rates are lower everywhere, there are certain parts of the country that continue to see more than their fair share of bankruptcy claims.


According to a survey commissioned by NerdWallet, high rates of bankruptcy filing appear to impact states in the South far more than those located in other regions. In fact, six out of the 10 states with the highest bankruptcy rates are in the South, as are eight of the 10 counties with the highest bankruptcy rates. Nationwide, the median bankruptcy rate was 226 filings per 100,000 residents. In three states the bankruptcy rate was more than twice as high, with Georgia averaging 483 bankruptcies per 100,000 residents, Alabama coming in at 529 and Tennessee with the highest rate of 553 bankruptcies per 100,000 residents.


The news was even worse on a county level. Nationwide, the average county bankruptcy rate is 224 per 100,000 people. Every county in the top 10 worst had levels at least 3 times that high. In Clayton County, GA, there were 1,096 filings per 100,000 residents. The only place with a higher bankruptcy rate was Shelby County, TN (home to Memphis). The bankruptcy rate there was 1,286 filings per 100,000 residents, more than five times as many as the national average.


What are the reasons for such high rates in one geographic area? According to experts, the economies in many of the southern states aren’t noticeably worse off than other states, especially those in the Rust Belt that may even have higher rates of unemployment. Though jobs exist, experts say that one thing these states have in common is a low average annual income. The vast majority of these southern states (and the southern counties) have annual household incomes lower than the U.S. average, straining the ability of families to repay debts.


Another problem facing residents of the South is that many of these states lack legal even basic protections for consumers. According to the experts at NerdWallet, many of those states with the highest bankruptcy rates also happen to be the places with the most stringent bankruptcy requirements and the fewest protections. For instance, states like Alabama and Kentucky have few if any exemptions under their bankruptcy laws, meaning when a person files for bankruptcy creditors can seize most if not all of their assets. This results in those going through bankruptcy being forced to start from scratch, often in an even more financially vulnerable situation, increasing the likelihood of future financial problems.


If you are contemplating bankruptcy in the Charlotte area, please call the skilled lawyers at Arnold & Smith, PLLC find additional resources here. As professionals who are experienced at handling all kinds of bankruptcy matters, our attorneys will provide you with legally sound advice for your particular situation.


About the Author

Kyle Frost Bankruptcy Lawyer Student loan attorneyKyle Frost joined Arnold & Smith, PLLC in 2013 where he focuses his practice on all aspects of civil litigation and bankruptcy, including: Chapter 7, Chapter 11, Chapter 13, home loan modifications and landlord-tenant issues.

Born and raised in upstate New York, Mr. Frost attended the University at Albany on a Presidential Scholarship, graduating magna cum laude with a double major in Political Science and Sociology.  He went on to attended Wake Forest University School of Law in Winston Salem, North Carolina.

Following college, Mr. Frost spent over a year teaching English in South Korea. He worked in a private school in Seoul developing curriculum, English programs, and educating both children and adults that were interested in learning a new language.

In his spare time, Mr. Frost enjoys homebrewing, fishing, and travelling.






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