More than 1m filed for bankruptcy in 2008

01.07.09
By Lewis Green

It may come as little surprise that consumer bankruptcies increased in 2008, given the current state of the economy.

According to figures from the American Bankruptcy Institute, overall consumer filings increased by nearly one third last year to reach 1.06 million.

This reflects a large jump from 2007's figure of 801,840 bankruptcies, which many say is a result of both the weak economy and a better understanding of bankruptcy law.

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 effectively made it more difficult for people to file for Chapter 7 bankruptcy by raising the cost.

According to CNN Money, in the run-up to the implementation of this law at the beginning of 2006, filings increased by 32 percent - then they fell by 72 percent the following year.

"There was a perception that the 2005 law prevented bankruptcy, but that perception is going away now," Henry Sommer of the Consumer Bankruptcy Assistance Project told the news provider.

And, with rising unemployment numbers, high levels of consumer credit card debt and homeowners losing money on their mortgages, the bankruptcy trend is not likely to reverse anytime soon.

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Bankruptcies rose by 32% last year