Personal bankruptcy filings in 2010 reached their highest levels in five years and will continue to rise in the new year, according to the American Bankruptcy Institute.
Consumer bankruptcies reached roughly 1.53 million for the 2010 calendar year ended Dec. 31, numbers compiled by National Bankruptcy Research Center for ABI concluded. The figure represents a 9% increase from 2009, when approximately 1.41 million consumer filings were recorded.
For December alone, 118,146 personal bankruptcy filings were made — a 4% increase from the amount of filings made in the same period a year ago. The organization also concluded that filings made in December 2010 rose 3% from the previous month. Chapter 13 bankruptcy filings, which allows individuals to restructure their debts and retain their property, constituted 30% of all personal bankruptcy filings made this December.
Most Affected Areas
The regions that appeared to be the hardest hit by personal bankruptcy filings were situated in the Southwest, with some exceptions, while the Southeast appeared to experience the most dramatic declines in personal bankruptcy filings. The states that saw the largest increases in bankruptcy filings in 2010 from the previous year included Hawaii (28.9%) California (25.0%), Utah (24.4%) and Colorado (17.4%). Conversely, states that saw drops in the rate of personal bankruptcy filings included Tennessee (-7.2%), West Virginia (-7.1%), South Carolina (-4.1%), Iowa (-3.6%) and Kentucky (-2.7%).
“The steady climb of consumer filings notwithstanding the 2005 bankruptcy law restrictions demonstrate the families continue to turn to bankruptcy as a result of high debt burdens and stagnant income growth” said ABI’s Executive Director Samuel J. Gerdano in a Jan. 3 statement. Gerdano added that his organization expected consumer filings to continue to rise in 2011.
Separate data released this past November by the Office of Public Affairs for the United States Courts indicated both business and consumer bankruptcy filings made in federal courts for the fiscal year 2010 (which includes the 12-months period ending Sept. 30) totalled approximately 1.6 million–a nearly 14% increase from the previous year. Chapter 13 filings for that period rose 9.2 % from, from 398,210 in FY 2009 to 434,839 in FY 2010.
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Sources: National Bankruptcy Research Center, republished by The Wall Street Journal