According to recent numbers, since the Feds reformed bankruptcy laws five years ago, the number of filings for bankruptcy protection has skyrocketed. On April 1st, the Automated Access to Court Electronic Records (AACER) released data compiled from various court filings and showed 158,141 US bankruptcy petitions were filed in March alone—20% more than (132,005) March 2009, and 35% more than this year’s February (117,240).
Of the 158,141 petitions filed, 149,979 were for individuals while 8,162 were filed by businesses. More than half of the petitions were Chapter 7 related—which allows, more often than not, the consumer to a fresh, financial “do-over.” Other petitions were Chapter 11 (business related) and Chapter 13—allowing the consumer room to remove certain debts.
This number of filings is the highest recorded since the Feds reformed and revamped the US Bankruptcy Code, back in the fall of 2005. Clearly, despite the Code’s restructuring, many consumers and small businesses are still feeling the pinch of the recession and are fighting to pay off large debts and consequently, save slipping credit scores.
In 2009, data shows 1.47 million bankruptcy filings—the most since the record, 2.08 million, filed back in 2005. Petitions for individuals jumped 32% (to 1.41 million) and 40% for businesses (roughly 61,000).
Is filing for bankruptcy a trend? The “way out” in order to regain financial balance in an economically unstable United States? It seems to be, despite the process and some of the connotations bankruptcy carries along with it. However, more than anything these days, sadly, more than a trend or “way out,” it has become a necessity for many Americans.