| Increased Bankruptcy Filing |
| By Credit Federal |
Published
11/4/2008
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Financial News
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More People Filing Bankruptcy Due to Personal Debt and Mortgage Crisis
According to the American Bankruptcy Institute, personal bankruptcy filings rose 40% from last year.
As people struggle to pay mortgages, auto loans and credit card bills, the American Bankruptcy Institue (ABI) predicts filings will reach 1.1 million this year, despite the new, tighter bankruptcy filing law.
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Did You Know?
It's easier to negotiate debt settlement than to file bankruptcy.
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Last year there was a total of 822,000 bankruptcy filings, compared to the over 880,000 already filed so far this year. These numbers are unexpectedly high, considering the new law that makes it more difficult for a person to file Chapter 7 bankruptcy protection which forgives most debts, including credit card debt. As you know, the law requires individuals to first undergo a review to determine whether they have enough income to pay some portion of their debts, as well as attend credit counseling before being allowed to file bankruptcy.
Immediately after the act was first passed three years ago, personal bankruptcy filings dropped from about 2 million in 2005 to only 600,000 in 2006. The numbers include both Chapter 7 and Chapter 13 filings. Chapter 13 forces consumers to put some portion of their income toward debts.
However; recently personal bankruptcies have been creeping higher as consumers find themselves deeper in debt.
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