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Credit Card Applications » News » Other » Bankruptcy Files Hit the 1.4 Million Mark in 2009

Bankruptcy Files Hit the 1.4 Million Mark in 2009

November 07, 2009 | Updated on November 07, 2009
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The content is accurate at the time of publication and is subject to change.

Despite the Bankruptcy Abuse Prevention and Consumer Protection Law of 2005 (BAPCPA) created to make it difficult for consumers to file bankruptcies, bankruptcy reports are in a steady increase. The first nine months of the year introduced a staggering 1.04 million individual bankruptcies according to the U.S. Bankruptcy Court statistics.

At this rate of increase it is predicted that the number of bankruptcy reports will reach more than 1.4 million at the end of the year. This according to Robert Lawless, professor of law at the University of Illinois, College of Law in Urbana-Champaign, puts the country back to its "natural level" of bankruptcy filings.

The growing number of consumers going extremely broke reflects the current economic climate. In September, the U.S. Bureau of Labor of Statistics recorded a 9.8 increase in the unemployment rate. This goes hand in hand with consumers tightening their credits. But consumers are not just the ones keeping away from credit. Providers too are lying low in offering new credit card services. Lawless says that consumers file bankruptcies when they can no longer use their credit cards "to stave of the day of reckoning".

His statement is supported by another survey conducted by AACER statistics. It was reported that between the months of July and September, more than 5900 bankruptcy petitions were being filed each day in courts all over the nation. There has only been a slight decrease compared to the 6000 recorded bankruptcy files in May.

The primary concerns of consumers were identified by Maureen Thompson, legislative director of Washington D.C.-based National Association of Consumer Bankruptcy Attorneys, as employment and health care. She says that the growing number of joblessness and the harsh medical bills are two things that greatly affect consumers' finances. As long as they are burdened by these, the county can not expect a decrease in bankruptcy files. She also adds, "People carry a lot of debt, and they have nowhere to turn right now."

What most people believed about the decrease in bankruptcy filings upon the new law taking effect was false. According to Thompson, thought the new law required higher filing fess, a means test for eligibility, counseling programs, and an eight-year moratorium before filing again, it didn't stop consumers from flocking the courts to file for bankruptcies. She explains that consumers go as far as they could to pay their bills, but when they are nearing foreclosures already while having insufficient wages or liens placed on their bank accounts, they have no choice but claim bankruptcy.

On the other hand, the new law seems to have triggered the increase. Before it took effect, consumers flocked courts to file their bankruptcies. The total number of filings for 2005 grew to two million. Though the numbers have dropped after some time, the filings climbed ever since. In fact, for 2009's first nine months, the amount of bankruptcy files was recorded to be nearly one-third higher than they were for the same period in the previous year.

California and Florida came up with the greatest bankruptcy filings with a total of more than 150000 filings. On per capita basis, Nevada stayed in the lead with 11.24 bankruptcy filings.

Disclaimer: This editorial content is not provided or commissioned by the credit card issuer(s). Opinions expressed here are the author's alone, not those of the credit card issuer(s), and have not been reviewed, approved or otherwise endorsed by the credit card issuer(s). Reasonable efforts are made to present accurate information, however all information is presented without warranty. Consult a card's issuing bank for the terms & conditions.
All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.
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  • Larry
    With the Virgin / Barclaycard signature offer, there seems to be some consumer deception or maybe even outright fraud goin on.   I decided to jump on this offer..  read all the info on it..  was approved for their platinum card, paid the fee, then was only awarded 10,000 points instead of the advertised 20,000.   When i inquired about the less than advertised bonus points, Barclaycard claims only Signiture Visa cardmembers get the 20,000..  as a platinum cardholder, you don't qualify for that level of bonus, so you get 10k instead.   Well, in their current ongoing promotions, it states plain as day that....    Applicants approved for the Visa Signature or Platinum Card with $49 annual fee will receive 20,000 Bonus Points awarded to your Virgin America Rewards Account at the close of the first billing statement in which you make your first purchase or balance transfer (that is not returned or rescinded) and have paid the Annual Fee on the account (and such fee is not rescinded). They don't mention anything about a separate program for platinum cardholders..  However, trying to get someone to resolve this issue with either Virgin or Barclaycard seems to be rather impossible.. Seems to me they're simply drawing people in with the fraudulent offer, then simply saying, oh, we're sorry you don't qualify..  but thanks for signing up for our garbage credit card with insane fees..   
  • CreditLandCom
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  • Deborah Ellsworth
     would very much like to start a new credit history  by making payments on time I would tohave a credit card that is NOT PREPAYID! I don't need a card with a high limit just something to start a new credit history. Thank You Deborah Ellsworth
  • Deborah Ellsworth
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  • Miss Edna
    there is a huge problem with the RFIP chip: it is easily compromised. There are already 'readers' in the form of what looks like a cellphone in a case, that scans all the info in the chip by merely walking near a person -- this 'reader' penetrates leather, cloth, spandex, etc. The only thing it will NOT penetrate is METAL. Perhaps one has seen commercials touting metal credit card cases. Here is my hint for a free fix: cut a piece of aluminum foil or use the foil that is used to keep foods fresh, like coffee. Cut it so that when folded once, it forms a sleeve for your credit card. place the credit card in the sleeve, then place the sleeve in your wallet.
  • Robin Parks
    I am looking to apply for the AARP Visa signature card from Chase that offers $100 after spend $500 in first 3 months, no annual fee and 0% interest first year; I don't want to mail in offer because of having to write in Social security #. Can you direct me to the proper on-line site?
  • CreditLandCom
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  • Becky
    This is Becky Now what do I do just waqit for acard to come to me?
  • CreditLandCom
    Once you have applied, you should receive a letter within 10 business days letting you know if you were approved and when your card will arrive. If you did not receive any letter or notification from the issuer, you should contact them directly. Also, you should contact the issuer if you’ve been waiting for your credit card longer than 30 days. Since we are not a bank and don’t issue credit cards, we cannot give you any information about your application or credit card.
  • SavingStar
    Thank you for posting about SavingStar. Just to clarify one sentence in your article, we have over 5 million members (not 500). Thanks, Josh
  • CreditLandCom
    Sorry for the misprint. We’ve corrected the sentence. Thank you for noticing that.
  • Eric
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