The number of U.S. consumers who filed petitions for personal bankruptcy protection grew 9 percent to 1.53 million in 2010 and this could rise as consumers struggle with excess debt in an uncertain economy, according to the American Bankruptcy Institute (ABI), an association of attorneys and other bankruptcy professionals, and the National Bankruptcy Research Center (NBKRC).
Personal bankruptcy filings rose to 1.53 million last year, up 9 percent from 2009 and the highest since 2005, the year the Bankruptcy Abuse Prevention and Consumer Protection Act was revamped.
According to the ABI and NBKRC, the overall consumer filing total for the 2010 calendar year reached 1.53 million compared to the 1.4 million during 2009.
The steady climb of consumer filings notwithstanding the 2005 bankruptcy law restrictions demonstrate that families continue to turn to bankruptcy as a result of high debt burdens and stagnant income growth, said Samuel J. Gerdano, executive director of ABI. We expect that consumer filings will continue to rise in 2011.
Federal judiciary year-end report also confirms the increase in the filings of bankruptcy petitions, which increased 14 percent and totaled to 1,596,355, over 2009. Filings rose in 73 of the 90 bankruptcy courts.
The NBKRC's data also showed that consumer filings increased 4 percent to 118,146 in December 2010 compared to the filings in December 2009.
Chapter 13 (individual with regular income whose debts do not exceed specific amounts) filings constituted 30 percent of all consumer cases in December 2010, a slight increase from November 2010.
According to the federal judiciary report, business petitions fell 1 percent while non-business petitions grew 14 percent.
Bankruptcy filings increased 16 percent under Chapter 7 (individual and business debtors), fell by 4 percent under Chapter 11 (business and consumer debtors), and grew by 9 percent under Chapter 13.
The (2005) law was supposed to reduce filings, but we are very close to levels we were at then, Gerdano said. The laws of economic gravity are more powerful than the laws passed by Congress.