Bankruptcy filings on the rise

03.06.09
By Nicholas Storie

Debt management spiraling out of control for a number of households is contributing to the rise in bankruptcy filings this year.

According to new statistics from the American Bankruptcy Institute, U.S. consumer bankruptcy filings spiked 29.2 percent in February compared to the same time one year ago.

February consumer filings totaled 98,344 or an almost 11 percent increase over January's figure of 88,773.

"We expect at least 1.4 million bankruptcies this year, even more if Congress changes the law to permit residential home mortgages to be modified in chapter 13," said ABI executive director Samuel J. Gerdano.

Soaring interest rates on credit cards coupled with increasing unemployment are taking a toll on household finances and have many consumers looking to the government and other lenders for help.

Earlier this week CitiMortgage unveiled a new assistance program to help homeowners stay on target with mortgage payments. The company also agreed to early 2009 legislation that allows judges to reduce mortgage debt on homeowners filing for bankruptcy.

The latest attempt from the government to offer homeowners relief was unveiled yesterday by the Treasury offering refinancing options to responsible holders of Fannie Mae and Freddie Mac-owned mortgages.

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Consumer bankruptcy is up 29 percent compared to last year