Zywicki in Atlanta Journal Constitution: Drop in Georgia Bankruptcy Filings

"Any time bankruptcy filings go down, you should be happy," Professor Todd Zywicki points out in an Atlanta Journal Constitution article examining evidence that Georgia is loosening its hold on particularly high personal bankruptcy rates.

Zywicki believes a cautiously optimistic interpretation of the evidence could indicate that fewer individuals are filing for bankruptcy because of a drop in unemployment and availability of lower interest rates to reduce expenses. Too, he says, many of those who took out subprime mortgages and other risky loans "have washed through the system by now."

He points out that a darker twist on the data could mean more people who are underwater on their mortgages are opting to walk away from homes with plunging market values, rather than attempting to forestall foreclosure with a bankruptcy filing.

Georgia's bankruptcy rates fall, Atlanta Journal Constitution, September 12, 2010. By Russell Grantham.

"Once fast-growing cities and regions with highly transient populations, such as Atlanta and the Southeast, tend to have consistently higher personal bankruptcy rates anyway, say experts. Georgia's banking laws that allow foreclosures in as little as 37 days also encourage more people to file bankruptcy to stall foreclosures, say some.

"But local bankruptcy filings hit a record high last year, said Williams, as the unemployment rate soared and the real estate crash fueled a glut of foreclosures that added to the traditionally high rate of bankruptcies in the state.

"Some of those problems have since abated slightly. But others have reversed recent improvements, muddying the picture for future bankruptcy trends."