Bankruptcies Up 40% In 2007

Although December marked a slight decrease in Chapter 13 filings from November, 2007 overall logged a whopping 40% rise in the number of bankruptcy filings compared to 2006, reports the Wall Street Journal—over 800,000 filings in 2007, versus around 570,000 the previous year.

ABI Executive Director Samuel J. Gerdano said the situation is likely to worsen in 2008. “The roughly 40% spike in consumer bankruptcies during 2007 presages even higher filings this year, as the heavy consumer debt load is made worse by the home mortgage crisis,” Mr. Gerdano said.

By comparison, however, 2005 had over two million filings—but “that was the year a large number of consumers filed for bankruptcy protection before stringent new bankruptcy rules went into effect.”

“Consumer Bankruptcy Filings Rose 40% in ’07″ [Wall Street Journal]
(Photo: Getty)

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  1. Nothing Can Kill the Grimace... says:

    2006 was artificially low since a lot of people rushed to declare before the new laws were enacted instead of stringing out as long as they could. I wouldn’t be surprised that accounts for most, if not all, of the difference.

  2. nutrigm says:

    what about 2004 data?

  3. polyeaster says:

    That picture is a bit upsetting:( But then so is bankruptcy…

  4. chrrey103 says:

    I saw this and then remembered that the laws just changed last year to make it harder to declare bankruptcies for individuals. It made me wonder if the government didn’t see the current economic outlook coming. or at least the lobbyist did.

  5. esquire_in_training says:

    Personal bankruptcy should be eliminated nearly entirely. Perhaps there are a small number of truly legitimate reasons as to why someone should be able to file for personal bankruptcy, but I certainly can’t think of any. I see it as a slimy way to get out of paying debts that you knowingly and voluntarily incurred. It drives up prices and interest rates for those of us who are responsible and make good on our debts.

  6. goodkitty says:

    @esquire_in_training: But corporate bankruptcy should still exist so evil CEO’s can just run a company into the ground, collect their gold, and move on? Or so badly run companies (e.g. Delta Air) can just continue to rinse and repeat?

    It scares me to think of having one slip up, such as getting hit by a car, and having $1.5m in hospital bills to have to deal with. Even with health “insurance” there’s no guarantee any or all of that will be covered. I think the concept of having my life ruined (financially) over something simple like that is ridiculous. I could go out and kill someone and get arguably a less burdensome sentence.

    The newer laws will help. No more going out and getting free money anymore. To do that nowadays, you have to set up a corporation. ;)

  7. wring says:

    @esquire_in_training: /slaps you around with a frozen trout.

  8. Parting says:

    @esquire_in_training: Major reason = medical bills. Or you prefer being sold into slavery for the rest of your life, because insurance does not cover your ”whatever” health problem?

  9. pastabatman says:

    @chouchou:

    Thread winner.