Bankruptcy Facts (Not all of them pleasant …)
Bad Debt Consolidation by splinder
Filed under Bankruptcy
According to Automated Access to Court Electronic Records (AACER), consumer and commercial bankruptcy filings were at 1.1 million in 2008. Despite reforms aimed at making it tough for individuals to file for bankruptcy, bankruptcy facts remained grim during and after the financial crisis of 2008.[br]
Bankruptcy Facts: 2009 Trends
According to a report published by the Administrative Office of the US courts, more than 1,300,000 bankruptcy cases were filed in the year ending June 30, 2009. This represented a 35% rise in the number of bankruptcy cases filed the previous year. The report indicated that:
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Consumer bankruptcy cases accounted for the majority of the rise, as more than 1,250,000 new consumer cases were filed in the year; 34% over the previous year.
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A total of 907,603 new Chapter 7 cases were filed, reflecting a 47% rise
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A total of 384,187 new Chapter 13 cases were filed, reflecting a 12% growth.
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Chapter 12 filings made by farmers also rose by 34%.
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Chapter 11 filings rose by 91%, reflecting the sharpest rise in fiscal 2009.
According to the National Bankruptcy Research Center, new filings in July 2009 amounted to more than 125,000. This amounted to the highest number of filings in a given month since Congress enacted the new bankruptcy laws in 2005.
Even the commercial filings rose phenomenally in May 2009, hitting 376 filings per day, up from 255 in May 2008. John Pottow, University of Michigan bankruptcy law professor, commented that this wave in corporate bankruptcies will cause a secondary wave in consumer filings.[br]
Bankruptcy Facts: Driving Factors
This surge in filings in 2009 was attributed to:
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Rising job cuts
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Tighter credits
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Dwindling 401(k) accounts
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Smaller paychecks
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Lower savings
While numerous debt-laden consumers turned to consumer credit counseling services for assistance, credit counselors found it harder to help. According to David Jones, president of the non-profit Association of Independent Consumer Credit Counseling Agencies, “We used to be able to help 20% to 25% of people who came to us, and now we can only help 7% to 8%.”
All of these factors had left unemployed workers and even those with jobs struggling with fewer financial resources to keep creditors at bay.