Bankruptcy and the Economy
Bankruptcy is booming in America, with the unstable economic climate and the mortgage crisis looming over a majority of Americans. Many individuals and businesses are seeking financial relief and are turning to their constitutional right to file for bankruptcy. Filings with the United States Bankruptcy Court in San Francisco jumped from 12,025 in 2007 to 20,067 in 2008. In California as a whole, the number of bankruptcy filings are up nearly 50 percent from last year according to a study conducted by the Consumer Bankruptcy Project at Harvard.
Data released by the Administrative Office of the U.S. Courts revealed that the total number of United States bankruptcies filed from July 1, 2008 through September 30, 2008 has increased by 34 percent over the same period in 2007. The number of chapter 7 and chapter 11 filings have increased the most, increasing by 40 percent and 49 percent respectively, for the 12-month period ending in September 30, 2008 compared to the same period in 2007. And the numbers are only expected to go up in 2009.
Following Congress' passage of the Bankruptcy Abuse Prevention and Consumer Protection Act in 2005, the number of bankruptcy filings dropped by approximately 50 percent. However, with the recession the country is currently facing, even the new laws have not prevented thousands of people from seeking bankruptcy protection. In the wake of the American foreclosure crises, bankruptcy attorneys are reporting that they now spend more time trying to convince people to let their houses go whereas in the past the goal was to get a person into bankruptcy to save their house.