U.S. consumer bankruptcy filings soared 37 percent in May compared with the same period last year, according to figures released Tuesday by the American Bankruptcy Institute.
The figures, using data compiled by the National Bankruptcy Research Center, show total filings in May were 124,838, up from 91,214 recorded in May 2008Last year’s figure was a jump of nearly 30 percent from 2007.
At that pace, the ABI expects more than 1 million will seek bankruptcy protection by December.
The trend is being fueled by the economy as companies shed employees, who in turn fall into financial straits, unable to pay their bills.
“As consumers continue to face increasing levels of unemployment and rising foreclosure rates, bankruptcy filings will continue to accelerate as families seek financial relief from the tough economic climate,” Samuel J. Gerdano, the ABI’s executive director, said in a statement. “We predict more than 1.4 million new bankruptcies by year end.”
A large chunk of filings this past May — 27 percent — were Chapter 13s. That type of filing allows a consumer with regular income to budget some of his or her future earnings to repay unsecured creditors either partially or completely.
But the percentage of Chapter 13s was lower than last year’s figure of 31.9 percent, reflecting the tight economy as the national unemployment rate has edged higher to 8.9 percent. (In Georgia, the rate is 9.3 percent.)
State by state figures for May aren’t expected to be released for an additional two weeks, but in the first quarter, total filings — which include businesses and consumers — rose 36 percent in the U.S. Bankruptcy Court’s Northern District of Georgia, which includes Atlanta.
The court expects total filings for the year to exceed those in 2008.
Reported out on June 02, 2009
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