Bankruptcies Increase By 38% Last Year
May 14, 2008 · Print This Article
The U.S Courts Administrative Office has announced that, during 2007, the number of bankruptcies filed by both businesses and consumers in the US have went up by 38% to a grand total of 850,912, making for some of the highest numbers in recent years.
Furthermore, a collection of legal gurus have stated that they believe an even higher percentage of bankruptcies should be expected for 2008 on account of the subprime mortgage crisis that is leaving homeowners no choice but to accept foreclosure.
It is believed that there were 617,660 filings of bankruptcy in 2006, a much smaller number that is based on the reports of an agency that collects data from the federal courts in the US.
Almost every case of bankruptcy in the 2007 filings involved individuals, making for a total of 822,590 to be exact. Nonetheless, cases of businesses filing for bankruptcy also rose, climbing up 44% over the previous year and totaling at 28,322.
Samuel Gerdano, executive director of the ABI, or American Bankruptcy Institute, has said that it seems very probable that there will be over 1 million cases of bankruptcy filed by consumers this year. He went on to say that consumers are feeling the pressure of rising interest rates, unsurmountable credit card debts, and home mortgage spikes that are making it more difficult to manage their money successfully.
People are increasingly getting worried about the fact that their homes don’t function as a financial backbone anymore, and are likewise finding it harder to justify paying so much for something that they can’t realistically afford.
The highest record for bankruptcies occurred in the year 2005 when over 2 million cases of bankruptcy were filed right before the federal bankruptcy law was redesigned to increase the difficulty of eliminating debt under Chapter 7. The reformed law also increased the requirements for paying debts under Chapter 13 bankruptcy and removed some protections that consumers took advantage of, such as stalled house evictions and even proceedings for child support.
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