U.S. Consumer Bankruptcies May Exceed 1.6 Million

By Edvard Pettersson
Aug. 4 (Bloomberg) -- U.S. consumer bankruptcies, after rising 9 percent last month from June, might exceed 1.6 million this year, according to the American Bankruptcy Institute.

The 137,698 bankruptcy filings in July also represent a 9 percent increase from a year earlier, the institute said yesterday in a statement posted on its website, citing data from the National Bankruptcy Research Center.

“Debt burdens, unemployment and an uncertain economic climate continue to weigh on consumers,” Samuel J. Gerdano, the institute’s executive director, said in the statement. “The pace of consumer filings this year remains on track to top 1.6 million filings.”

Last year, there were 1.4 million consumer bankruptcy filings in the U.S., a 32 percent increase from 2008, the institute said in March. Total filings have been increasing since the implementation of the Bankruptcy Abuse Prevention Act of 2005, a change to the federal law that made it harder for individuals to seek protection from creditors, the institute said in March.

In 2005, a record 2 million consumer bankruptcies were filed as people tried to eliminate their unsecured debt before the new law went into effect. The following year, 598,000 consumer cases were filed and the number has risen in each year since.

Grandpa: During the first 6 months of 2010, the number of bankruptcy filings rose to 770,117 from 675,351 during the first 6 months of 2009. This represents a 14% increase over the same period in 2009.

The American Bankruptcy Institute recaps annual bankruptcy filings and profiles business and non-business filings from 1980 through 2009. In 1980, non-business (consumer) bankruptcy filings were 287,570. Link to data

On track to experience a 556% increase in consumer bankruptcy filings from 30 year ago levels while interest rates remain at historic low levels is truly a sad commentary about our economy.