Bankruptcy Filings Increase
Credit card debt, home mortgages and a host of other financial woes have been the cause of an increase in bankruptcy filings for the current year. Compared to one year ago the total bankruptcy filings for the US increased by 28% in the third quarter of this year. This is also an increase of nearly 4 percent since mid-year.
Total filings during the three months that ended September 20, 2007 reached 218,909. This is in comparison to filings of 210,449 for the second quarter and 171,146 for one year ago.
These numbers can be a bit confusing however. According to the Administrative Office of the U.S. Courts bankruptcy filings have decreased by 29 percent during the 12 month period ending September 30, 2007. This is compared to a total of 1,112,542 bankruptcy cases filed for the previous 12-month period.
The decline is attributed as a direct result of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. The bankruptcy reform act has also dramatically reduced Chapter 7 filings. For the 12 month period that ended September 30, Chapter 7 filings decreased 42 percent while Chapter 13 filings actually increased by 14 percent.
The new bankruptcy act is considered by some to be much harsher on consumers than the previous laws were that governed personal bankruptcy. Because of this it is assumed that fewer consumers are able to seek protection under the new act as compared to those seeking protection in the past. While this assumption is held by many, it is not held by all, some of whom would argue that the overall economy is better than it was last year and thus there are fewer people needing to seek protection from the courts.
Generally speaking, the numbers of bankruptcy filings during the third quarter of any given year are less than filings for the second quarter of the year.
Source: Administrative Office of the U.S. Courts