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U.S. Bankruptcy Filings are Up 11 Percent This Year

Some experts say that the recession ended last year, others are not so sure. In Ohio and across the nation many Americans are still struggling. In the first 9 months of 2010 roughly 1.16 million consumer bankruptcy cases were filed across the country, according to the American Bankruptcy Institute. Bankruptcy filings in the United States increased 11 percent this year compared to the same time frame in 2009.

Last month 130,329 consumer bankruptcy filings occurred in the U.S., a 4.4 percent jump from 2009. Samuel J. Gerdano expects that the number of bankruptcy filings this year will climb to 1.6 million by year-end. The number of bankruptcy cases filed this year is the highest since 2005, when federal bankruptcy law changed.

Congress passed the bankruptcy overhaul in 2005 in an effort to reduce bankruptcy filings. The Bankruptcy Abuse Prevention and Consumer Protection Act was passed with generally bipartisan support. The objective of the act was to make it harder for consumers to discharge their debt.

The act added a means test to bankruptcy law for individuals who earn above median income to increase the number of cases that file under chapter 13. 30 percent of all consumer bankruptcies in September were filed under chapter 13, according to the American Bankruptcy Institute.

Bankruptcy expert and Harvard law professor Elizabeth Warren opposed the bill in 2005. Warren is now working in the Obama administration as Assistant to the President and Special Advisor to the Secretary of the Treasury on the Consumer Financial Protection Bureau. In 2005 Warren said the bankruptcy overhaul bill "was designed to point a thousand daggers squarely at consumers in trouble."

Source: MSN Money, "Bankruptcies continue to climb," Mark Huffman, 5 Oct 2010

 

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