Since 2011, bankruptcy filings in the Oakland Division of the Northern District of California have been steadily declining.
The Oakland Division includes the counties of Contra Costa and Alameda. To give you some perspective, in 2011 the total number of bankruptcies filed in the Oakland Division was 13,561. The high point was 2010 when 15,032 bankruptcies were filed. In 2022 only 1,313 bankruptcies were filed. Doing the math, that is more than a 90% drop in the number of filings between 2010 and 2022. Yes, the tide has finally turned. The number of filings from January, 2023 to September, 2023 are equal to all of 2022.
2023 will be the first year since 2010 that we will have a net increase in filings for the year.
The high point in 2010 was the culmination of the real estate meltdown and financial crisis starting in about 2006. Prior to 2006 the average number of filings in the Oakland Division was about 7,800 per year. The low points of 2020 – 2022 were the culmination of a variety of factors including large amounts of government stimulus payments and government loans, delays in unlawful detainer, civil and collection actions, and mortgage foreclosure forbearance. Many people thought that bankruptcies were going to spike in 2020, then, 2021 and then 2022. In reality, bankruptcies declined during those years.
The uptick in bankruptcy filings at this time is not so much the result of widespread unemployment or people facing foreclosure but are more about business related problems post-pandemic. Many small businesses closed at some point over the last few years and the owners are just now getting collection actions on personal guarantees or pushback from their landlords. Other businesses are deciding to now just close as sales have not rebounded to pre-pandemic levels. Yes, there are a certain amount of consumers facing large credit card balances. As time goes on, we will likely see more consumers filing bankruptcy as credit card levels are at an all-time high and economic conditions have been stagnant or declining over the last year.
Bankruptcy is a financial tool to deal with overwhelming debt. Many people can get away from credit card debt and get a fresh start. Bankruptcy can be a strategic option for those in between jobs or businesses.