Report Finds Bankruptcy Numbers on the Rise

   

Posted: Apr 15, 2009

A recent analysis by the Associated Press finds that a growing number of Americans are turning to bankruptcy protection, despite a 2005 law that was intended to make the process more difficult.

In a report released this week, the AP finds that about 1.2 million Americans filed for bankruptcy in the past year, with 130,831 of them doing so in the past month alone. This represents a 46 percent jump over last March's figures and an 81 percent jump since March of 2007.

"You wouldn't get this large of a rise without serious problems in the economy," UCLA law professor Lynn LoPucki told the AP.

Bankruptcy is often a last resort for consumers because of the devastating effect it can have on their credit score for as long as ten years.

The AP cited a dropoff in bankruptcy in 2006, the year after the tougher regulations took effect, but points out that the figures are now approaching their pre-2005 levels due to the current economy and ensuing credit freeze. In the past year, about four out of every 1,000 businesses or individuals reportedly filed for bankruptcy, nearly double the rate recorded in 2006.