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According to an analysis recently performed by Professor Ronald Mann of Columbia Law School for the National Bankruptcy Research Center, the number of Americans who filed for bankruptcy protection fell by about 12 percent last year. Approximately 1.35 million people in the U.S. filed for bankruptcy in 2011. In 2010, that number was 1.5 million, or one out of every 150 people. Additionally, Chapter 7 filings declined by 17 percent and Chapter 13 filings were down 25 percent. The decline was the first drop in the number of U.S. bankruptcy filings since 2006.

However, California did not fare as well as the rest of the nation. One in every 120 Californians filed for bankruptcy protection in 2011. California had the fifth-highest statewide bankruptcy rate in the nation. The state with the highest bankruptcy rate was Nevada. Even after a 20 percent decline in filings from 2010, one in 88 Nevada residents filed for bankruptcy protection in 2011. Two California counties, San Bernardino and Riverside, were among the top five urban counties for highest bankruptcy rates nationwide. The remaining three counties are home to the cities of Memphis, Tennessee, Atlanta, Georgia, and Las Vegas, Nevada.

Unlike 2010 when regional variations existed, the decreases in bankruptcy filing rates in 2011 were spread out across the nation as a whole. Only the State of Delaware experienced an increase in personal bankruptcy filings last year. Professor Mann was careful to warn against reading too much into the 2011 bankruptcy rate decline. Because bankruptcy filing rates increased during the last two months of 2011, he believes bankruptcy filings may again be on the rise in 2012.

An individual, or debtor, who seeks to regain control of their finances through bankruptcy will generally file for Chapter 7 or Chapter 13 protection. In a Chapter 7 bankruptcy, a debtor's nonexempt assets are liquidated at the direction of a bankruptcy court in order to satisfy creditor claims. Any remaining claims are then discharged and the debtor is no longer personally liable for the debt. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 requires a bankruptcy court to determine whether an individual consumer debtor qualifies for relief under Chapter 7. If the debtor's income is too high, he or she may not be eligible for Chapter 7 relief.

A Chapter 13 bankruptcy focuses on reorganization and is designed for an individual debtor who has a regular source of income. A debtor must make regular payments according to a bankruptcy plan and is protected from garnishments, lawsuits, and other creditor actions. After the plan is completed, any remaining debts are discharged. This type of bankruptcy is more common among homeowners. The bankruptcy process is complex. If you are struggling financially, it is a good idea to contact an experienced bankruptcy attorney to discuss your options.