After several years of steady increase in overall business bankruptcy filings (Chapters 7, 11, 13) to a high in 2009 of 60,307 filings (up more than 207% over filings in 2006), filings in 2010 and 2011 have steadily decreased.

Here's what the bankruptcy data says:

# of Business Bankruptcy Filings
Year	Chapter 7	Chapter 11	Chapter 13	Total	% Change from Previous Year
2006	12,057	4,831	2,764	19,652	---
2007	18,755	5,764	3,412	27,931	up 42.1%
2008	30,097	9,290	3,854	43,241	up 54.8%
2009	42,054	13,714	4,539	60,307	up 39.5%
2010	39,701	11,813	4,232	55,746	down 7.6%
2011	33,698	9,772	3,630	47,100	down 15.5%

In addition, calendar year filings in each of the 11 Federal Districts were down in 2011 compared with 2010.

Federal Court District	% Decrease in 2011 compared with 2010
District of Columbia	40.9%
1st - ME, MA, NH, RI, PR	10.8%
2nd - CT, NY, VT	20.7%
3rd - DE, NJ, PA, VI	18.2%
4th - MD, NC, SC, VA, WV	17.4%
5th - LA, MS, TX	14.8%
6th - KY, MI, OH, TN	16.6%
7th - IL, IN, WI	9.2%
8th - AR, IA, MN, MO, NE, ND, SD	16.0%
9th -AK, AZ, CA, HI, ID, MT, NV, OR, WA, Guam, NMI	12.5%
10th - CO, KS, NM, OK, UT, WY	15.6%
11th - AL, FL, GA	16.6%

Quarterly Filings (2009, 2010 and 2011)

Chapter 7 filings decreased in all but two quarters from a 9-year high in Q3 2009 of 10,862 to 7,858 in Q4 2011 – down 27.7%.

Quarter	# Chapter 7 Filings	% Decrease from Previous Quarter
Q3 2009	10,862	---
Q4 2009	10,604	2.4%
Q1 2010	10,132	4.5%
Q2 2010	10,363	2.3% (increase)
Q3 2010	9,863	4.8%
Q4 2010	9,328	5.4%
Q1 2011	8,669	7.1%
Q2 2011	8,756	1.0% (increase)
Q3 2011	8,415	3.9%
Q4 2011	7,858	6.6%

Chapter 11 and 13 filings had their ups and downs, but continued to decrease, ending up significantly lower than filings in their highest quarters. For all three chapters, the total decrease from high quarter (Q2 2009) to Q4 2011 was 30.8%.

Chapter	Quarter	# Filings	% Decrease
11	Q2 2009	3,984	---
11	Q4 2011	2,313	42.0%
13	Q2 2009	1,196	---
13	Q4 2011	839	30.0%
7, 11 and 13	Q2 2009	15,914	---
7, 11 and 13	Q4 2011	11,010	30.8%

All chapters showed a decrease in each 2011 quarter compared with 2010 quarters.

Chapter	Quarter	% decrease	Chapter 11	% decrease	Chapter 13	% decrease
Q1 2010	10,132	---	3,308	---	1,067	---
Q1 2011	8,669	14.4%	2,621	20.8%	977	8.4%
Q2 2010	10,363	---	2,861	---	1,094	---
Q2 2011	8,756	15.5%	2,590	9.5%	898	17.9%
Q3 2010	9,863	---	2,925	---	1,039	---
Q3 2011	8,415	14.7%	2,243	23.3%	916	11.8%
Q4 2010	9,328	---	2,712	---	1,030	---
Q4 2011	7,858	15.8%	2,313	14.7%	839	18.5%

Are We Beginning to Recover Economically?

While the business bankruptcy situation seems to indicate an improvement in the U.S. economy, the overall U.S. deficit is increasing, the housing market is deplorable, and many people are out of work. So, are there other indicators providing any confidence that we’re headed in the right direction? Here are a few other encouraging signs:

Gross Domestic Product has shown growth (although inconsistent growth) in each of the last 10 quarters after 4 quarters of negative data in Q3 2008 through Q2 2009. The pickup in GDP in Q4 2011 is contributed to upward inventory investment and an acceleration of consumer spending for durable goods.
Imports and exports are at record highs. When imports grow, it’s usually a sign of an expanding economy. Ditto for exports.
Overall, exports have been at record levels for the last 16 months.
January 2012’s jobs data show the U.S. economy is gaining momentum. American companies added 243,000 new jobs in January bringing the unemployment rate down to 8.3% from a high of 9.1% in August 2011.
Growth in manufacturing. According to the Commerce Department, factory orders rose 12.1% in 2011; 12.9% in 2010 after plunging 22.1% in 2009.
In February, Wells Fargo Advisors lowered their probability of U.S. recession from 35% to 20%: "... Based on our analysis of U.S. economic data alone, the probability of recession in the United States has been declining during the past few months as the economic data improved. However, the risk of recession is also dependent on global factors not just U.S. factors. We have maintained the probability of recession at 35% since last fall because we believed there was continuing risk of European problems potentially hurting the U.S. economy. Fortunately, that risk appears to be diminishing now. As a result, we are lowering our probability of recession to only 20%. Nevertheless, this 20% still includes a small premium for the possibility that the European debt crisis could take a turn for the worse. But, the risk from Europe appears to be decreasing as policymakers pump extra liquidity into the European financial system."

No question, things are moving very slowly and, as we all know, there are still problems – a lot of them. I’m certainly no expert. And I generally tend toward the "glass as half-empty" approach. But, based on the statistics, it may well be that our economy is headed in the right direction. We can only hope.

*****

Subscribe to the Credit-to-Cash Advisor
Monthly e-Newsletter -- It's Free

This information is provided by ABC-Amega Inc. ABC-Amega is a respected receivable management firm headquartered in the United States with more than 80 years experience in commercial receivable management.

Any opinions expressed in this article are the opinions of the author, not the opinions of ABC-Amega Inc., the sponsor of Credit-to-Cash Advisor and www.credit-to-cash-advisor.com.

For more information on ABC-Amega Inc., contact info@abc-amega.com or visit the company web site at www.abc-amega.com.