Real-Life Math -- Solution
The chart tracks personal, corporate and secured bankruptcies in
your area for the years 2004 to 2008. It is based on the number
of bankruptcies per 1,000 population.
The trend for all 3 types of
insolvencies is similar.
Personal bankruptcies declined steadily in
2005 and 2006. In 2007, the rate rose dramatically. In 2008, the personal
bankruptcies have shown a steady decline.
Corporate bankruptcies have
always been less prevalent in your region than personal bankruptcies. At the
end of 2008, the rate was declining and the rate of corporate bankruptcies
was at the lowest point for the period measured.
Secured asset insolvencies
follow a pattern similar to personal bankruptcies, but the decline is less
steep in 2008.
From the chart, you decide that the rate of bankruptcies
in your area is steadily declining. However, the rate might begin to peak
again within a year or two if the pattern remains consistent.
"I have
observed trends over the past 20 years," says Earl Sands, a bankruptcy trustee.
"The rate will spike when times are bad, then fall off a bit, plateau, and
then spike again."