Number of Small Business Bankruptcies Declined in 2011

A recent study by Equifax finds that the number of small businesses that have filed for protection under bankruptcy law has dropped by 15.32 percent from the first quarter of 2010 to the first quarter of 2011.

While the drop in bankruptcy filings over the past year is good news for small business owners, the study also found that the total number of small business bankruptcies in the first quarter of this year are 30.03 percent higher than the number of filings in the first quarter of 2008, prior to the recession.

"In light of today's shifting economic conditions, bankruptcy trends serve as a valuable prism through which to evaluate the credit health of today's small business market," said Dr. Reza Barazesh, senior vice president of Equifax Commercial Information Solutions. "Our latest analysis shows that while business failures may be on the decline, conflicting trends are still making us question if the worst is behind us."

Small businesses in search of the appropriate law for which to file their bankruptcy under can typically choose from Chapter 7, or straight bankruptcy, which involves liquidation of non-exempt assets, and Chapter 11, or the reorganization plan, which allows the company to stay operational while a payment plan is formulated.

Small business bankruptcies declined in past year

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