Bankruptcies up 16 percent, on track for record year
By Bob Gravely
WASHINGTON More than 1 million Americans filed for bankruptcy during the first nine months of this year, setting a pace that is likely to surpass the record 1.4 million bankruptcy filings set in 1998.
Through the end of September, 1.1 million Americans had filed for personal bankruptcy, according to data released today by the Administrative Office of the U.S. Courts. That is a 16 percent increase over the first nine months of last year.
Business bankruptcy filings have increased by 10 percent so far this year, to 29,872 cases, according to the courts.
Job cuts, an erosion of personal income fueled in part by stock market losses and record consumer debt levels are all to blame for the increase in consumer filings, said Kenneth Posner, an analyst at Morgan Stanley Dean Witter & Co.
"I expect bankruptcy to rise by another 20 to 30 percent next year," Posner said.
Bankruptcy cases increased steadily to 1.4 million in 1998 from 284,517 in 1984. Filings decreased slightly in 1999 and 2000.
"All in all, we are certainly on track to break the overall record," said Sam Gerdano, executive director of the American Bankruptcy Institute, a nonpartisan research institution.
Analysts blame the increase in business filings on the collapse of unprofitable Internet businesses, and a faltering economy after an unprecedented decade of expansion.
Nearly two in three Americans who file for bankruptcy do so under Chapter 7 of the bankruptcy code, which allows debtors to escape some credit card and other unsecured debt after liquidating some assets.
For the most recent 12-month period, a little more than 1 million consumers filed for Chapter 7 protection, compared with 412,272 that filed under the Chapter 13 section of the law, which requires debts to be repaid over five years.