Bankruptcy filings among American individuals and businesses rose to record levels in March of this year, according to a report by Reuters. Here’s a look at the numbers and what they mean for bankruptcy in the U.S.
- 158,141 bankruptcy petitions were filed in the U.S. during March, 2010, according to numbers released by Automated Access to Court Electronic Records (AACER).
- This number represents a 35 percent increase from February, 2010, and a 20 percent increase from March, 2009.
- Prior to March, the most filings during a single month since the implementation of the new bankruptcy law in 2005 occurred in October 2009, when 133,393 cases were filed.
- Of the total cases filed, 149,979 bankruptcy petitions were from individuals and 8,162 petitions were from businesses.
- Nearly three-quarters of all petitions filed were under Chapter 7 of the U.S. Bankruptcy code; the remainder were mostly Chapter 13 cases, with a few Chapter 11 cases as well.
These numbers are significant for a number of reasons.
BAPCPA and Filing for Bankruptcy
The nation’s bankruptcy laws were overhauled in 2005 with the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA). Because the law was expected to make bankruptcy protection more difficult to get, filings soared just before the law passed as people sought protection under the old law.
In 2005, a record year for bankruptcy filings, 2.08 million cases were filed, with both individuals and businesses filing at higher rates than usual.
After the late-2005 rush to file, there was a lull, but in the years following, filings have increased steadily. Last year, 1.47 million bankruptcy cases were filed in the States, the highest since the law’s passage, and March’s numbers suggest that this year could have an even higher number.
Morals of the Story
The lessons here are important:
- You’re not alone: Many people delay filing for bankruptcy because of the stigma associated with it. These figures clearly show that significant numbers of Americans are struggling with debt.
- Bankruptcy isn’t out of reach: Many people feared that, with the BAPCPA laws in place, qualifying for bankruptcy protection would be almost impossible. Again, millions of Americans have been helped since the new law took effect, showing that much of the fear was unfounded.
Additional Resources
Bankruptcy Abuse Prevention and Consumer Protection Act (PDF)
