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.