Whatcom bankruptcies continue to drop, but are residents still financially stressed?
Fewer Whatcom County residents are filing for bankruptcy, but many households are dealing with financial stress through loans.
Last year Whatcom had 294 bankruptcy filings, according to data from the U.S. Bankruptcy Court Western District in Seattle. That’s down 15.5% compared to 2018 and down 63% compared to 10 years ago, when the U.S. was dealing with the aftermath of a global financial meltdown.
The decrease in bankruptcy filings locally bucked the national trend. U.S. Courts saw filings in 2019 increase a fraction to 774,940, up 1,522 from 2018, according to a news release.
The low bankruptcy filings come at a time when Whatcom County residents have higher-than-average personal loan debt. At the end of 2018 Whatcom residents who had a personal loan had an average balance of $32,672, according to a study by Experian. Personal loans are typically used to consolidate debt or make big purchases.
Nationally, household debt is on the rise. Several media reports indicate U.S. household debt exceeded $14 trillion at the end of 2019; it’s the first time that’s ever happened. Delinquencies are also on the rise nationally, particularly for credit cards, auto debt and student loans.
If household debt is rising in Whatcom County, that is something to monitor, said Hart Hodges, director at Western Washington University’s Center for Economic and Business Research. More debt can work if income is going up so that it can be serviced appropriately, and that can be a sign of confidence. But it’s not good if economic conditions change, he added.
Bellingham attorney Tom Lester said his office has seen fewer bankruptcies, but in recent years, he has focused on more complex filings. However, he still sees the vulnerabilities, such as how quickly a medical issue can wipe out a household’s savings, even ones that have health insurance.
Another trend he is noticing: Banks may make it harder to get credit, particularly in the consumer sector. A Feb. 4 article on the website CFO.com noted that a Federal Reserve survey found loan officers think lending will tighten this year in areas like credit cards and auto loans.
