The American Bankruptcy Institute, a nonpartisan group that provides research and education on bankruptcy and insolvency, recently released statistics gathered from all U.S. bankruptcy courts, finding that the overall rate of bankruptcy dropped in 2013 by 13 percent over the previous year. Moreover, this is the fourth year in which that rate went down.

“The 2013 filings represent the lowest total since 2007, and they have dropped each year since 2010,” said the ABI’s executive director, who expects the trend to continue.

Last year, there were a total of 1,032,326 bankruptcy filings nationwide. Of those, 988,215 were personal bankruptcies, which was a decrease of 12 percent over the previous year. Business bankruptcies dropped substantially more — 24 percent overall. Of the various types of commercial bankruptcy, however, the greatest drop was in Chapter 11, which fell by an astonishing 31 percent from 2012’s numbers.

There was also a bit of good news for California. While our state was hit hard by the foreclosure crisis and the economic downturn it caused, California was not among the states with the highest per-capita bankruptcy rate. Tennessee topped that list, with about 6.59 bankruptcy filings per 1,000 residents. Georgia, Alabama, Utah and Indiana also suffered last year.

It’s not quite the case that a lower bankruptcy rate translates directly to fewer people and businesses struggling with debt. There is often a great deal of hesitation to file, particularly when the economy might turn things around. Also, the rate can’t capture those who fear they can’t afford to file. That said, it’s generally good news for individuals and companies.

On the other hand, the ABI also pointed out that the bankruptcy courts rely on filing fees for much of their budget. Fewer filings means less money for the courts — and that could translate into fewer programs for people who can’t afford those fees.

If you or your business is dealing with unmanageable debt, you should take heart from knowing that you’re not alone, even if bankruptcy is slightly less common than it was at the height of the Great Recession. Talk to a bankruptcy lawyer about whether bankruptcy could be a positive solution to the difficulties you’re facing now. Whether you need your qualifying debt wiped out through Chapter 7 or prefer a reorganization and repayment plan such as those offered through Chapter 11 and Chapter 13, it’s worth knowing your legal options.

Source: American Bankruptcy Institute, “Total Bankruptcy Filings Down 13 Percent in Calendar Year 2013, Commercial Filings Down 24 Percent,” Jan. 6, 2014