The past several years of economic turmoil have been hard on families in Kentucky and throughout the nation. Job losses and other financial problems have led many to file for personal bankruptcy in an effort to seek relief from overwhelming debt.

New data shows this trend may be improving, at least for now.

According to the National Bankruptcy Research Center, personal bankruptcy filings dropped by 12 percent in 2011, as compared with the previous year. All told, 1.35 million Americans filed for Chapter 7 or Chapter 13 bankruptcy last year. In 2010, there were more than 1.5 million filings.

Chapter 7 bankruptcies, which allow filers to liquidate most of their debts, were down by 17 percent. Chapter 13 bankruptcies, which use a structured payment plan to allow filers to pay off their debt, fell by 25 percent.

The drop marks the first decline in personal bankruptcies since before the Great Recession began.

Reasons For the Decline Are Unclear

The researchers did not say what factors they believe contributed to the drop in personal bankruptcy filings. Some commentators have hypothesized that the decline may be due to a decreased reliance on consumer debt or to the fact that so many individuals filed for bankruptcy at the start of the recession.

Others, including Florence bankruptcy attorneys, worry that many people avoid filing for bankruptcy because of misconceptions about the effects bankruptcy will have on their personal finances. The notion that bankruptcy spells financial death couldn't be further from the truth. To the contrary, bankruptcy gives filers the ability to start over with a clean financial slate.

Going through bankruptcy is never easy, but often it's an important first step to a secure financial future.

Source: Los Angeles Times, "Personal Bankruptcies Fall in 2011 to One Out of 175 Americans," Tiffany Hsu, Jan. 5, 2012