Personal Bankruptcy Filings Continue to Rise in 2010
Tap to Call - (877) 250-8242

Personal Bankruptcy Filings Continue to Rise in 2010

, Contributing Writer

Stories like that of Juan Flores have become all too common these days, as personal bankruptcy filings continue to rise.

Flores owns a carpet care store in San Diego. When the recession hit, his business dropped by half, and he had to draw on credit cards and a second mortgage to stay open. Despite his best efforts, though, and in danger of losing his home, he decided to file for Chapter 13 bankruptcy.

Flores appeared in San Diego’s bankruptcy court, according to a story by Time, and according to him he is behind again on the payments that he had agreed to with the filing. Wells Fargo Bank wants to restart the proceedings to foreclose on his home.

In the first quarter of 2010, according to the article, personal bankruptcy filings in twelve states have gone up by double-digit percentages when compared with the averages from 2009. The month of March has seen the most bankruptcy filings since October 2005, when legislation passed creating more stringent requirements for filing.

In March, 158,141 bankruptcy petitions were filed in the U.S. by both businesses and individuals, which represents a 35 percent increase over the number filed in February. The last record-high month of filings was October 2009. March 2010 numbers are a 19 percent increase over October.

Records come from Automated Access to Court Records (AACER), whose president, Mike Bickford, said “What is suprising here is that there are still hefty increases in states like Arizona, California and Florida. You would think there might be some leveling off in these states, but that is not the case.” Bickford is referring to the fact that the states hardest hit by the housing bubble bursting would have by now seemed to have found some relief. Such is not necessarily the case, according to the Time article.

Some scholars, however, are not as shocked by the high bankruptcy numbers. Personal borrowing in the U.S. is high, near ten times higher than it was in 1960. With the evaporation of consumer credit, those Americans borrowing heavily are ending up in bankruptcy court, according to law professor Robert Lawless.

Another bankruptcy expert, Katherine Porter of the University of Iowa and UC Berkeley, said that many people struggle with debt for several years before turning to bankruptcy court.

Chapter 7 bankruptcy filings are rising more quickly than Chapter 13 filings. Chapter 13 have dropped from being 35 percent of the bankruptcy filings to being 25 percent. Porter calls Chapter 7 bankruptcy, “very fast and very deep debt restructuring.”

Chapter 7 bankruptcy calls for liquidation of assets, and the rise in these sorts of filings suggest that individuals may more frequently be looking for a fresh start after debt problems. Such is the impact of the recession, as Chapter 13 bankruptcy is more geared towards normal economic circumstances, in which people fall behind on their debts but for shorter periods of time, according to Porter.”

The future doesn’t look much better. Samuel J. Gerdano, the executive director of the American Bankruptcy Institute, told Time that he expects the number of 2010 bankruptcy filing rates to surpass those of 2009.

» Back to Bankruptcy Articles

Tap to Call - (877) 250-8242

Copyright © 2018 MH Sub I, LLC. All rights reserved. ® Self-help services may not be permitted in all states. The information provided on this site is not legal advice, does not constitute a lawyer referral service, and no attorney-client or confidential relationship is or will be formed by use of the site. The attorney listings on this site are paid attorney advertising. In some states, the information on this website may be considered a lawyer referral service. Please reference the Terms of Use and the Supplemental Terms for specific information related to your state.Your use of this website constitutes acceptance of the "Terms & Conditions", "Supplemental Terms", "Privacy Policy" and "Cookie Policy."